29 May ACC 202 Milestone Two Guidelines and Rubric
ACC 202 Milestone Two Guidelines and Rubric
Overview
The next step in planning for your new business is to analyze the cost behaviors and systems of your industry and conduct the relevant financial calculations to determine appropriate costing solutions. In this milestone assignment, you will conduct a break-even analysis to determine your target profits and the selling price you plan to use to achieve these profits for each product.
Directions
Use information from Milestone One and provided in the Milestone Two Market Research Data Appendix, which is linked in the Supporting Materials section below, to conduct a cost-volume profit analysis. Complete the Contribution Margin Analysis and Break-Even Analysis tabs in the Project Workbook, linked in the What to Submit section below, that you used for completing the Milestone One assignment.
Specifically, you must address the following rubric criteria:
- Contribution Margin: Determine your contribution margin per unit in the Contribution Margin Analysis tab.
- Choose a sales price for each product.
- Calculate the contribution margin for each product based on your sales price and the variable cost for that product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
- Break-Even Analysis: Use cost-volume-profit (CVP) analysis to determine your break-even points for achieving your target profits in the Break-Even Analysis tab.
- Determine the break-even points for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
- Determine break-even units for the suggested target profits for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
What to Submit
Submit the Project Workbook with the Contribution Margin Analysis and Break-Even Analysis tabs completed. This file should be completed and submitted using Microsoft Excel.
Supporting Materials
The following resource supports your work on this assignment:
Reading: Milestone Two Market Research Data Appendix
Milestone Two Rubric
CriteriaExceeds ExpectationsMeets ExpectationsPartially Meets ExpectationsDoes Not Meet ExpectationsValueContribution Margin: Sales PriceChooses a sales price for each product (100%)N/AN/ADoes not attempt criterion (0%)10Contribution MarginCalculates the contribution margin for each product, with no errors (100%)Calculates the contribution margin for each product, with some errors (85%)N/ADoes not attempt criterion (0%)20Break-Even Analysis: Break-Even PointsDetermines the break-even points for each product, with no errors; shows work through calculations or formulas (100%)Determines the break-even points for each product, with minimal errors (85%)Determines the break-even points for each product, with significant errors (55%)Does not attempt criterion (0%)30Break-Even Analysis: Target ProfitsDetermines break-even units for the suggested target profits for each product, with no errors; shows work through calculations or formulas (100%)Determines break-even units for the suggested target profits for each product, with minimal errors (85%)Determines break-even units for the suggested target profits for each product, with significant errors (55%)Does not attempt criterion (0%)40Total:100%
Cost Classification
| Milestone One: Cost Classification | ||||||
| Instructions: | ||||||
| Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. | ||||||
| The Fixed and Variable cost classifications have been provided for you. | ||||||
| Item/Cost | Direct Material | Direct Labor | Overhead | Period Costs | Fixed | Variable |
| Salary—Collar maker | x | |||||
| Salary—Leash maker | x | |||||
| Salary—Harness maker | x | |||||
| Salary—Receptionist | ||||||
| High-tensile strength nylon webbing | x | |||||
| Polyester and nylon ribbons | x | |||||
| Buckles made of cast hardware | x | |||||
| Depreciation on sewing machines | x | |||||
| Rent | x | |||||
| Utilities and insurance | x | |||||
| Scissors, thread, and cording | x | |||||
| Price tags | x | |||||
| Office supplies | ||||||
| Other business equipment | ||||||
| Loan payment | x | |||||
| Salary to self | x | |||||
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Variable and Fixed Costs
| Milestone One: Variable and Fixed Costs | ||||||||||||
| Collars | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | $ 4.00 | Collar maker's salary (monthly) | $ 2,773.33 | |||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan payment | $ 183.33 | |||||||||||
| Salary to self | $ 166.67 | |||||||||||
| Total Variable Costs per Collar | Total Fixed Costs | |||||||||||
| Leashes | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | Leash maker's salary (monthly) | |||||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan payment | ||||||||||||
| Salary to self | ||||||||||||
| Total Variable Costs per Leash | Total Fixed Costs | $ – 0 | ||||||||||
| Harnesses | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | Harness maker's salary | |||||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan | ||||||||||||
| Salary to self | ||||||||||||
| Total Variable Costs per Harness | Total Fixed Costs | |||||||||||
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Contribution Margin Analysis
| Milestone Two: Contribution Margin Analysis | |||||
| COLLARS | LEASHES | HARNESSES | |||
| Sales Price per Unit | |||||
| Variable Cost per Unit | |||||
| Contribution Margin | |||||
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Break-Even Analysis
| Milestone Two: Break-Even Analysis | ||||||
| COLLARS | LEASHES | HARNESSES | ||||
| Sales Price | $ – 0 | $ – 0 | $ – 0 | |||
| Fixed Costs | $ – 0 | $ – 0 | $ – 0 | |||
| Contribution Margin | $ – 0 | $ – 0 | $ – 0 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 300.00 | $ 400.00 | $ 500.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 500.00 | $ 600.00 | $ 650.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
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COGS
| Milestone Three: Statement of Cost of Goods Sold | ||
| Beginning Work in Process Inventory | $ – 0 | |
| Direct Materials: | ||
| Materials: Beginning | 0 | |
| Add: Purchases for Month of January | ||
| Materials Available for Use | ||
| Deduct: Ending materials | ||
| Materials Used | ||
| Direct Labor | ||
| Overhead | ||
| Total Costs | ||
| Deduct: Ending Work in Process Inventory | 0 | |
| Cost of Goods Sold | ||
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Income Statement
| Milestone Three: Income Statement | ||
| Revenue: | ||
| Collars | $ – 0 | |
| Leashes | – 0 | |
| Harnesses | – 0 | |
| Total Revenue: | $ – 0 | |
| Cost of goods sold | – 0 | |
| Gross profit | $ – 0 | |
| Expenses: | ||
| General and administrative salaries | $ – 0 | |
| Office supplies | – 0 | |
| Other business equipment | – 0 | |
| Total Expenses | $ – 0 | |
| Net Income/Loss | $ – 0 | |
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Variances
| Milestone Three: Variance Analysis | ||||||
| Data for Variance Analysis: | ||||||
| Budgeted (Standard) Hours/Qty | Budgeted (Standard) Rate | Actual Hours/Qty | Actual Rate | |||
| Labor | ||||||
| Materials | ||||||
| Variance | Favorable or Unfavorable | |||||
| Direct Labor Time Variance | ||||||
| (Actual Hours – Standard Hours) x Standard Rate | $ – 0 | |||||
| Direct Labor Rate Variance | ||||||
| (Actual Rate – Standard Rate) x Actual Hours | $ – 0 | |||||
| Direct Materials Quantity/Efficiency Variance | ||||||
| (Actual Quantity – Standard Quantity) x Standard Price | $ – 0 | |||||
| Direct Materials Price Variance | ||||||
| (Actual Price – Standard Price) x Actual Quantity | $ – 0 | |||||
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Milestone Two: Market Research Data Appendix
You have conducted some market research for style and size of products you want to use to launch your business. The market research has indicated the sales price ranges listed below will be optimal for your area depending on the style of products you choose to sell.
· Collars
With pricing at $20 per collar, you can expect to sell 30 collars per day.
With pricing at $24 per collar, you can expect to sell 25 collars per day.
With pricing at $28 per collar, you can expect to sell 20 collars per day.
Leashes
With pricing at $22 per leash, you can expect to sell 28 leashes per day.
With pricing at $26 per leash, you can expect to sell 23 leashes per day.
With pricing at $30 per leash, you can expect to sell 18 leashes per day.
Harnesses
With pricing at $25 per harness, you can expect to sell 25 harnesses per day.
With pricing at $30 per harness, you can expect to sell 22 harnesses per day.
With pricing at $35 per harness, you can expect to sell 20 harnesses per day.
Additionally, you will need to compare your break-even points for the target profits for each area of your business as listed below to determine your prices.
Collars
Break-even
$300 target profit each month
$500 target profit each month
Break-even
$400 target profit each month
$600 target profit each month
Harnesses
Break-even
$500 target profit ea
