Contribution Margin and ?Break-Even Analysis: You have conducted some market research for style and size of products you want to

Milestone Two: Market Research Data

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 following sales price ranges will be optimal for your area depending on 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 following target profits for each area of your business to determine your prices:

Collars

Break-even

$300 target profit each month

$500 target profit each month

Leashes

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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.

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.

Guidelines for Submission

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.

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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
Variances for Collar Sales
			Variance	Favorable/ 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

&8ACC202 –

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