Module 1 - SLP Assignment: INTRODUCTION TO MANAGERIAL ACCOUNTING
Everything Umbrella Inc. is considering producing a new type of umbrella. This new pocket-sized umbrella would fit into a coat pocket or purse.
Prepare a table with three columns to include the following information:
• Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative.
• Classify the costs listed as either product costs or period costs.
List of expenses incurred by Everything Umbrella Inc.
1. Cost of advertising the product.
2. Fabric used to make the umbrellas.
3. Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame.
4. Wages of workers who assemble the product.
5. President's salary.
6. The salary of the supervisor of the people who assemble the product.
7. Wages of the product tester who stands in a shower to make sure the umbrellas do not leak.
8. Cost of market research survey.
9. Salary of the company's sales managers.
10. Depreciation of administrative office building.
SLP Assignment Expectations
The table should be easy to read and nicely formatted with adequate explanations. Here is an example of the first two lines of a table.
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Expense item
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DM/DL/OH/Sell./Adm.
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Product/Period
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Advertising
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Selling expense
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Period cost
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The use of Excel is required. Here are a couple of resources for using Excel if you have limited experience with this tool.
Excel Made Easy - A Beginner's Guide. Keynotes.
Excel 2016. [Videos]. GCF Global.
Both content and presentation will be evaluated.
Module 2 - Case Assignment: COST BEHAVIOR AND COST-VOLUME-PROFIT ANALYSIS
Assignment Overview
Review the three components in the background material to answer the questions and make computations relating to cost behavior and break-even analysis.
Case Assignment
Part 1
Ten Short-Answer Questions
1. Differentiate between variable and fixed costs. Describe the two major behavior patterns. What if a cost has characteristics of both patterns?
2. What is meant by the term break-even point? What is a potential benefit of calculating break-even?
3. Why is the concept of relevant range crucial for understanding fixed-cost behavior?
4. What is the formula for calculating the break-even point in sales revenue?
5. What formula is used to solve for the break-even point in units?
6. How can the break-even formula be altered to calculate the number of units that must be sold to achieve a desired level of income (target income)? Show the formula and explain.
7. What effect would you expect the mechanization and automation of production processes to have on the break-even point?
8. Why might a business wish to lower its break-even point? How would it go about lowering the break-even point?
9. Describe three ideas that can lower the break-even point and include a simple example with numbers.
Part II
Real-World Example
Review the background material and do some research to find a real-world example where cost-volume-profit analysis was applied or could be applied. Information can be found in the news, research papers, and on investment sites. Another option is to locate the financial statements for a company, make some assumptions, and prepare your own break-even analysis from an external point of view. Describe the situation and the results. Show computations when appropriate.
Assignment Expectations
Part I
Write 3-5 sentences for each question.
Part II
Write an essay (300-500 words).
Show sources when appropriate and APA format is suggested, but not required.
Module 2 - SLP Assignment: COST BEHAVIOR AND COST-VOLUME-PROFIT ANALYSIS
This assignment consists of three independent scenarios for which computations should be shown.
Scenario A
Compute the break-even point in sales dollars if fixed costs are $200,000 and the total contribution margin is 10% of revenue.
Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
Scenario B
Danny Company makes and sells stuffed animals. One product, Panda Bear, sells for $28 per bear. Panda Bears incur fixed costs of $120,000 per month and a variable cost of $12 per bear. How many Panda Bears must be produced and sold each month to break even?
Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
Scenario C
Jerry is considering buying a company if it will break even or earn net income on revenues of $100,000 per month. The company that Jerry is considering sells each unit it produces for $5. Use the following cost data to compute the variable cost per unit and the fixed cost for the period. Calculate the break-even point in sales dollars. Should Jerry purchase this company?
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Volume (units)
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Total Cost
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8,000
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$70,000
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68,000
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$190,000
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Scenario C is more involved than the other three.
Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.
SLP Assignment Expectations
Show computations in good format and explain answers as required. Excel is a great tool to make computations and present financial information in an easy-to-understand format. Write comments below the computations in Excel. Submit only the Excel file. Both content and the clarity of the presentation will be evaluated for grading purposes.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.