Milestone 3 income statement

Instructions

Southern New Hampshire University

College of Continuing Education (COCE)

ACC 202 - Managerial Accounting

MILESTONE 1 (Due in Module 2) MILESTONE 2 (Due in Module 4) MILESTONE 3 (Due in Module 5)

1. 1. 1.

Name Choose a price range and calculate: Create a Cost of Services Schedule.

Location Grooming

Vision Day Care

Mission Boarding

2. 2. 2.

Identify the following: Calculate the break-even units: Create an Income Statement.

Direct Materials Grooming Revenue will be provided at the end of week 4.

Diret Labor Day Care

Manufacturing Overhead Boarding

Period Costs Calculate the break-even for target profits:

3. Grooming 3.

Day Care

Calculate the Variable and Fixed Costs for: Boarding Calculate for the Grooming line:

Grooming Direct Labor Time Variance

Day Care Direct Labor Rate Variance

Boarding Direct Materials Efficiency Variance

Direct Materials Price Variance

ACC202 - MANAGERIAL ACCOUNTING

Company Profile

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Variable and Fixed Costs

/xl/drawings/drawing1.xml#VariableFixedCosts

Cost Classification

/xl/drawings/drawing1.xml#CostClassification

Contribution Margin

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Break-Even Analysis

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COS Schedule

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Income Statement

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Variances

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Instructions Milestone 1

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Instructions Milestone 2

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Instructions Milestone 3

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Instructions - Milestone 1

Southern New Hampshire University

College of Continuing Education (COCE)

ACC 202 - Managerial Accounting

INSTRUCTIONS FOR MILESTONE 1 (Due Week 2)

IMPORTANT NOTE:

Make sure to completely review the rubric for Milestone 1.

Use the data from this milestone and begin working on your final presentation due in Milestone 4 (Week 7).

ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs):

GENERAL

You plan to open a pet services business that will offer dog grooming, day care, and boarding.

COMPANY PROFILE TAB

Determine a company name. Be creative (e.g., "Inspiring Dog Care").

Pick a location (e.g., "Chicago").

Define your company's vision and mission for how your business will add value to the community.

COST CLASSIFICATION

Accurately classify all of your costs (direct material, direct labor, manufacturing overhead, period costs).

Fixed and variable cost designation is provided.

VARIABLE AND FIXED COSTS

Determine your per-unit cost per dog for grooming, day care, and boarding.

OPERATIONAL AND COST INFORMATION:

For simplicity, base all calculations using 30 days in each month.

OPERATIONAL DATA

Grooming:

The groomer can groom 5 dogs a day, 5 days a week.

Each grooming takes 1.5 labor hours.

Day Care:

The day care can house 10 large dogs and 12 small dogs daily.

Day care is offered 6 days a week.

Boarding:

There are 12 kennels (single dog only).

Boarding (kennel services) is offered every day.

Facilities:

The Grooming facility is 200 square feet

The Boarding facility is 2,500 square feet

The Day Care facility is 1,500 square feet

General:

Loan for start-up costs - monthly payment of $420; in effect immediately; limited cash and loan funding - used angel investors

Modest monthly draw of $600 a month for first year; should be divided evenly among the services (grooming, day care, boarding)

SALARY & HIRING DATA

Groomer - $12.00 an hour, 40 hours a week

Day Care Attendant - $9.00 per hour, 22 days per month, 8 hours a day

Receptionist - $8.50 per hour, 30 hours a week

Kennel Attendant - $11.50 per hour, 22 days per month, 8 hours a day

OTHER COST DATA

Grooming:

Dog Grooming Arm - $300 .

Grooming Table - $900

Grooming Tub - $2,800

Clippers - $136.99; can be used for 100 grooms

Shampoo - $103.96 per 5-gallon pail; can be used for 100 grooms

Salon Tuff Capri Mobile Carry Cart - $90

Scissors (7-inch straight) - $194.99; used for 200 grooms

Scissors (ear and nose) - $7.49; used for 200 grooms

Day Care:

Fencing for Day Care area - $1,249

Fencing Installation - $1,000

Toys - $3.29 per 6 pack; one toy will last for two dogs in day care per day

Rubberized Flooring for Day Care - $3,800

Boarding:

12 Kennels; Depreciation is $80 per month

General:

Food and Water bowls - $3.59 per unit

Day Care - two bowls last for every 75 dogs that attend daycare

Boarding - two bowls last for every 100 dogs boarded; two bowls per kennel

Grooming - each bowl lasts for 20 grooms and you need 4 bowls at all times

Towels - $34.99 per 12 pack

Day Care - 12 towels for every 25 dogs

Boarding - 12 towels for every 40 dogs

Grooming - 2 towels for every groom per day

Heating System - $10,000; Depreciation is $83 per month; Allocate based on square footage

Rent - $650 per month; Allocate based on square footage

Utilities / Insurance - $600 per month; Allocate based on square footage

Cage Bank - $2,200 per set of 5

Dryer - $1,250

Cleaning Products

Odoban - $14.55 per gallon; Each area will dilute 1 oz to 1 gallon of water; Allocate based on square footage

Simple Green - $15.66 per gallon; Each area will dilute 1 oz to 1 gallon of water; Allocate based on square footage

.

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Company Profile

MILESTONE 1 - Company Profile

Company Name Brilliant Dog Care Services

Location Florida

Vision To be the best dog care providers in Florida

Mission Efficiency and quality well defines us!

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Cost Classification

Brilliant Dog Care Services

MILESTONE 1 - Cost Classification Exercise

INSTRUCTIONS:

Classify each item or cost as: Direct Material, Direct Labor, Manufacturing Overhead, or Period Costs.

Place an X in the appropriate column. No numbers are needed.

The fixed and variable cost classifications have been provided for you. For more information, see Objective 1 in Chapter 5.

Item/Cost Direct Material Direct Labor Manufacturing Overhead Period Costs Fixed Variable

Groomer X X

Day care attendant X X

Receptionist X X

Kennel attendant X

Food and water bowls X X

Fencing for day care area X

Installation of fencing X

Dog grooming arm (attaches to table) X

12 kennels cost X

Depreciation on kennels X

Rent X X

Utilities and insurance X X

Grooming table X X

Grooming tub 48" X X

Heating system X X

Depreciation on heating system X X

Clippers X

Shampoo (Crystal Clear: five-gallon pail) X X

Cage bank (set of five) X

Salon Tuff Capri mobile carry cart X

Towels X

Scissors (7-inch straight, ear & nose) X

Toys (used in day care only) X X

Cleaning products (used throughout) X X

Dryer X

Rubberized flooring (day care) X X

Loan X X

Draw X X

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Variable_Fixed

Brilliant Dog Care Services

MILESTONE 1 - Variable and Fixed Cost Exercise

INSTRUCTIONS:

Determine the per-unit cost for each dog.

Fill in the blanks to get the per-unit cost and fixed cost of each service. Most costs are provided for you. Only fill in the missing costs.

Based on 5 grooms per day

GROOMING

Item Variable Costs Item Fixed Costs

Shampoo $ 1.040 Groomer $ 2,080.01

Clipper(s) 1.37 Rent 30.95

Bowls 0.72 Loan 20.00

Towels 5.83 Utilities and Insurance 28.57

Scissors 1.01 Depreciation on heating system 3.95

Cleaning Products: Odoban 2.08

Cleaning Products: Simple Green 2.36

Draw 200.00

Total Variable Costs $ 9.97 Total Fixed Costs $ 2,367.92

Based on 22 dogs per day, 25 operating days for day care, and 22 eight-hour work days for day care attendant.

DAY CARE

Item Variable Costs Item Fixed Costs

Day care attendant $ 2.88 Rent $ 232.14

Toys 0.27 Loan 150.00

Bowls 0.19 Utilities and Insurance 214.29

Towels 1.40 Depreciation on heating system 29.64

Cleaning Products: Odoban 15.59

Cleaning Products: Simple Green 16.78

Draw 200.00

Total Variable Costs $ 4.74 Total Fixed Costs $ 858.44

Based on 12 dogs per day, 30 operating days for boarding, and 22 eight-hour work days for kennel attendant.

BOARDING

Item Variable Costs Item Fixed Costs

Kennel attendant $ 5.62 Depreciation on kennels $ 80.00

Bowls 0.86 Rent 386.90

Towels 0.87 Loan 250.00

Utilities and Insurance 357.14

Depreciation on heating system 49.40

Cleaning Products: Odoban 25.98

Cleaning Products: Simple Green 29.55

Draw 200.00

Total Variable Costs $ 7.35 Total Fixed Costs $ 1,378.97

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Sheet1

Instructions - Milestone 2

Southern New Hampshire University

College of Continuing Education (COCE)

ACC 202 - Managerial Accounting

INSTRUCTIONS FOR MILESTONE 2 (Due Week 4)

IMPORTANT NOTE:

Make sure to completely review the rubric for Milestone 2.

Use the data from this milestone and begin working on your final presentation due in Milestone 4 (Week 7).

ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs):

GENERAL

Use data from Milestone 1 in your analysis.

CONTRIBUTION MARGIN ANALYSIS

Select a price for each service (grooming, day care, boarding).

Determine the variable cost from the Variable_Fixed tab for each service.

Calculate the contribution margin for each service based on your sales price and the variable cost for that service.

BREAK-EVEN ANALYSIS

Determine the fixed cost from the Variable_Fixed tab for each service.

Fixed and Variable cost designation is provided.

Calculate the break-even units (round up) for each service.

Calculate the break-even units (round up) for suggested target profit levels for each service.

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Contribution Margin Analysis

Brilliant Dog Care Services

MILESTONE 2 - Contribution Margin per Unit and Contribution Margin Ratio

INSTRUCTIONS:

Select a price from the scenarios below and compute the contribution for each service based on your selected price.

Variable cost per unit comes from your Variable_Fixed tab completed in Milestone 1.

SCENARIO (choose one from each category):

Dog Day Care

1. With pricing at $18 per dog per day, you can expect to have 22 dogs per day.

2. With pricing at $20 per dog per day, you can expect to have 15 dogs per day.

3. With pricing at $25 per dog per day, you can expect to have 10 dogs per day.

Overnight Boarding

1. With pricing at $25 per dog per day, you can expect to have 12 dogs per day.

2. With pricing at $28 per dog per day, you can expect to have 10 dogs per day.

3. With pricing at $30 per dog per day, you can expect to have 7 dogs per day.

Basic Groom

1. With pricing at $25 per dog per day, you can expect to have 5 dogs per day.

2. With pricing at $30 per dog per day, you can expect to have 4 dogs per day.

3. With pricing at $35 per dog per day, you can expect to have 3 dogs per day.

DAY CARE BOARDING GROOMING

Sales Price $ 20.00 $ 25.00 $ 35.00

Variable Cost per Unit 4.74 7.35 9.97

Contribution Margin $ 15.26 $ - 0 $ 17.65 $ - 0 $ 25.03

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Break-Even Analysis

Brilliant Dog Care Services

MILESTONE 2 - Break-Even Analysis

INSTRUCTIONS:

Show all steps and calculations to determine the break-even.

Determine the break-even for the target profit levels as outlined in the instructions.

Round all decimals UP to next whole number.

Break-even = Fixed Costs / Contribution Margin

DAY CARE BOARDING GROOMING

Sales Price $ 20.00 $ 25.00 $ 35.00

Fixed Costs $ 858.44 $ 1,378.97 $ 2,367.92

Contribution Margin $ 15.26 $ 17.65 $ 25.03

Break-Even Units (round up) 56 78 95

Target Profit $ 417.00 $ 583.00 $ 1,000.00

Break-Even Units (round up) 56 78 95

Target Profit $ 667.00 $ 909.00 $ 1,500.00

Break-Even Units (round up) 56 78 95

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Instructions - Milestone 3

Southern New Hampshire University

College of Continuing Education (COCE)

ACC 202 - Managerial Accounting

INSTRUCTIONS FOR MILESTONE 3 (Due Week 5)

IMPORTANT NOTE:

Make sure to completely review the rubric for Milestone 3.

Use the data from this milestone and begin working on your final presentation due in Milestone 4 (Week 7).

ITEMS TO COMPLETE FOR THIS MILESTONE (Purple Tabs):

GENERAL

Use data from Milestone 1 and Milestone 2 in your analysis.

Data needed for the income statement will be shared in an announcement at the end of Module Four.

COST OF SERVICES SCHEDULE (THIS IS THE SAME AS A COST OF GOODS MANUFACTURED SCHEDULE. THIS IS USED FOR SERVICE COMPANIES.)

Use the data at the top of the schedule to complete the report.

INCOME STATEMENT

Use the data at the top of the schedule to complete the report.

Use the data from your COS Schedule.

VARIANCES

Use the data at the top of the schedule to calculate the following:

Variance

Favorable / Unfavorable

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COS Schedule

Brilliant Dog Care Services

MILESTONE 3 - Statement of Cost of Services

INSTRUCTIONS:

The following are the actual numbers for January:

Materials

Purchased $5,000 of Materials

Consumed 40% of those purchased materials

Direct Labor

Direct Labor was $6,240

Factory Overhead

Factory Overhead was $2,800

Brilliant Dog Care Services

Statement of Cost of Services

For the Month Ended January 31, xxxx

Beginning Work-in-Process Inventory $ - 0

Direct Materials:

Materials - Beginning $ - 0

Add: Purchases for month of January 5,000

Materials Available for Use $ 5,000.00

Deduct: Ending Materials 3,000

Materials Used $ 2,000

Direct Labor 6,240

Factory Overhead 2,800

Total Manufacturing Overhead $ 9,040.00

Deduct: Ending Work-in-Process Inventory - 0

Cost of Services $ 11,040

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Income Statement

Brilliant Dog Care Services

MILESTONE 3 - Income Statement

INSTRUCTIONS:

Complete the statement in proper form.

Revenue will be provided in an announcement at the end of Module 4

(based on actual number of services for your pricing levels).

Additional information necessary to complete the income statement:

General and Administrative Salaries paid = $1,200

Advertising = $100

Cleaning Products = $120

Depreciation = $83

Rent = $650

Loan = $420

Utilities and Insurance = $600

Brilliant Dog Care Services

Income Statement

For the Month Ended January 31, xxxx

Revenue:

Grooming $ 3,325 WRONG YOUR SALES ARE CALCULATED WRONG (PLEASE SEE VIDEO ON MILESTONE 3 FINANCIAL STATEMENTS.

Day Care 1,120 WRONG You should show calculations like I did in the video.

Boarding 1,950 WRONG

Total Revenue $ 6,395

Cost of Goods Sold * $ 11,040

Gross Profit $ (4,645)

Expenses:

G&A Salaries $ 1,200

Advertising $ 100

Cleaning Products $ 120

Depreciation $ 83

Rent $ 650

Loan $ 420

Utilities and Insurance $ 600

Total Expenses $ 3,173

Net Income / Loss $ (7,818)

* Cost of Goods Sold = Cost of Services (COS)

There is no finished goods inventory to maintain.

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