Final Project - Draft of Costs
Overview: Classifying a company's costs allows for an in-depth analysis of the impact that changes in output have on revenues, costs, and net income or net loss.
A cost-volume-profit (CVP) analysis will be completed in order to determine the breakeven point. Relevant costs will be used to prepare a flexible budget.
Additionally, an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale. Finally, a memo should be prepared for management that summarizes the results of the quantitative analysis and makes recommendations for an optimal costing system to be ethically used by key decision makers.
For Milestone One, you will use the MDE Manufacturing Budget (Table I) to analyze costs, contribution margin, and breakeven point for the bird feeder division of the company. In Tab 1 of your Student Workbook, classify costs as either product or period costs. Briefly explain the difference between the types of costs. Then, analyze the actual costs and, using Tab 2 of your Student Workbook, complete a cost-volume-profit analysis to determine how many bird feeders must be sold at the current cost and sales price level to earn a $10,000 profit and how much the sales price would have to increase to earn a $10,000 profit at the same cost and sales volume level. Submit the Student Workbook with Tabs 1 and 2 completed with your cost calculations and a 1-2 page Word document that explains the implications of your findings and addresses all of the critical elements in Section I.
Specifically, the following critical elements must be addressed:
I. Costs
a) Classify all product and period costs appropriately.
b) Compute a cost-volume-profit analysis. What are the implications of this analysis?
c) Compute contribution margin per unit and contribution margin ratio.
d) Determine the breakeven quantity and the breakeven revenue accurately.
e) Determine if the company is breaking even. What are cost-volume-profit analysis implications on short-term planning?
Guidelines for Submission: Your paper must be submitted using the Student Workbook to present your calculations and a 1-2 page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins to explain your findings.
Attachment:- Assignment.rar