Business Finance Homework Help

Overview

Successful entrepreneurs understand all aspects of business, especially costs and costing systems. In the course project, you will assume the role of the owner of a small business and apply managerial accounting principles to evaluate and manage costs related to your services within a costing system. In the first milestone of the project, you will determine and classify the costs necessary for opening your business.

Scenario

You plan to open a business manufacturing collars, leashes, and harnesses for pets. To begin, you will manufacture these in a standard style and size with plans to expand your range over the year. In a few weeks, you will present your company’s financial strategy to some key investors. To begin creating your strategy, you need to consider and record all the costs associated with operating your business. You have decided to use the job order costing system.

Prompt

Use the given operational costs in the Milestone One Operational Costs Data Appendix Word Document  to complete the first two tabs, “Cost Classification” and “Variable and Fixed Costs,” in the Project Workbook Spreadsheet.

Specifically, you must address the following rubric criteria:

• Cost Classification. Accurately classify all your costs in the “Cost Classification” tab of your workbook.
  • Identify direct material, direct labor, overhead, and period costs. (Note: Fixed and variable costs have been classified for you.)
• Variable and Fixed Costs. Complete the “Variable and Fixed Costs” tab of your workbook. (Note: Some costs are provided for you. Fill in only the missing costs.)
  • Determine your total variable cost per unit and the total fixed costs for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.

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.

Prompt

Use information from Milestone One and the provided Milestone Two Market Research Data Appendix Word Document to conduct a cost-volume profit analysis. Complete the “Contribution Margin Analysis” and “Break-Even Analysis” tabs in the Project Workbook Spreadsheet 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.