Cookie Business

Instructions

Cookie Business

In this project, you will be opening your own specialty cookie company to see how product costing methods and changes in production affect business decisions. You will be creating a series of reports and analyzing the results using the template provided to guide you through the project. 

The learning objectives of this project are as follows: 

1. Gain an understanding of product costing (direct materials, direct labor, and overhead). 

2. Review job order costing. 

3. Review process costing. 

4. Make business decisions based on analyzing accounting data. 

You will prepare a four- to five-page written report (including spreadsheets) with at least two scholarly sources using the  Unit II Project Template . Your report will provide the following information: 

Introduction 

Part 1: Establish a cookie business selling only one type of specialty cookie with two employees making the cookies. 

 Create a name and establish a location for the business. 

 Construct a mission statement for the business. 

 Decide on the type of cookie you want to make and sell. 

Part 2: Develop costing and sales information for 1,000 cookies. 

 Estimate and explain the cost per cookie based on job order costing (manufacturing overhead is 30% of direct labor costs). Prepare a job order cost sheet by researching and identifying the top five ingredients and their estimated costs as your direct materials. Research and identify the cost of wages for your two employees as your direct labor. It typically takes two days to make 1,000 cookies. 

 Estimate and explain the cost per cookie based on process costing with 40% conversion costs. Identify the top three processes you feel are needed to make the cookies and prepare a production cost sheet for one of those processes. 

 Estimate and explain the sales price you plan to set per cookie based on the cost data. 

Part 3: Compare and contrast the costing methods used in this project, including which you believe provides the most useful information as a manager. 

Part 4: Discuss what will happen to revenue if the number of the cookies sold increases or decreases. 

Conclusion and Recommendations 

Use the  Unit II Cookie Project Spreadsheet Templates for your job order, and process costing spreadsheets to be embedded in your case study document.

Cookie Business Final Project

Now that your cookie business is well underway, you are going to use the knowledge that you have gained in this course to evaluate the financial information for the company. You will be creating a series of reports and analyzing the results using the templates provided to guide you through the project. 

The learning objectives of this project are as follows: 

1. Apply accounting concepts and standards to the creation of accounting information and reports. 

2. Analyze accounting information used to make strategic business decisions. 

3. Apply ethical behavior to accounting-related situations.

4. Make business decisions based on analyzing accounting data. 

Using the  Unit VII Final Project Template , prepare a four- to five-page written report (including spreadsheets) with at least three scholarly sources. Your report will provide the following information:

Introduction 

Part 1: Based on the data presented in the  Unit VII Spreadsheet Template in Excel (CM Breakeven tab): 

 Calculate the contribution margin (CM) for each of the three products sold at the cookie business. 

 Calculate the weighted average CM. 

 Calculate the breakeven point.

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results based on your calculations as far as which type of cookie you think is the most profitable, which has the highest CM, etc.

Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete the calculations listed below. 

 Calculate the value of ending inventory under full or absorption costing. 

 Calculate the value of ending inventory under variable costing. 

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results, and comment on which method you think is more helpful to managers and why. 

Part 3: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Special Order tab), calculate the net increase or decrease in profit if they take the special order. 

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results and comment on if you think the cookie business should take on this special order of cookies for a wedding. Business has been slow the last few months, and the offer is less than the usual selling price for the cookies. 

As part of your discussion, include both quantitative (based on the numbers) and qualitative (not based on numbers) factors that would go into the decision to take on the special order. 

Part 4: Based on the data presented in the Unit VII Spreadsheet Template in Excel (IRR tab), calculate the internal rate of return (IRR) for the new equipment purchase. 

Complete your calculations by filling in the highlighted cells and embed a copy of the completed spreadsheet into this report. Note: the PV Annuity table is provided for you. Discuss if you think the cookie business should accept or reject the purchase of the new equipment and why.

Additional information has come to your attention regarding the equipment purchase. One of the partner’s brother owns the company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type of transaction. 

Part 5: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Cash Budget tab), calculate the cash receipts for the first quarter of this year. 

Complete your calculations by filling in the highlighted cells and embed a copy of the completed spreadsheet into this report. Discuss your observations about the way cash is collected if the company needs $150,000 per month for expenses. 

Part 6: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Variances tab), complete the following calculations. 

 Calculate the material variances. 

 Calculate the labor variances. 

Complete your calculations by filling in the highlighted cells and embed a copy of the completed spreadsheet into this report. Discuss your observations about the variances and ways to plan to improve any of the variances. 

Conclusion and Recommendations 

Summarize the key observations that you have made about the cookie business based on the calculations you have performed and present any future recommendations.

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