6:074 .. LED x ne Student Assignment Version 4.doc ... You have been invited to participate in an accounting competition. Your team will be making a presentation to Michelle and Vishayla who are sister's-in-law who have recently opened a bakery specializing in cakes. They realized their love of baking after they married brothers, Josh and Cody. For a few years they created cakes for family and friends. The demand for their cakes had grown to the point where they could no longer use their kitchens as their "hakery." They rented a store front on the Boulevard in Colonial Heights that used to be a diner. It had a kitchen that was converted into a bakery with large ovens, mixing bins, and prep decorating area. The owner made all the conversions for the bakery. They currently sell to individuals, area local stores, and event centers for parties/weddings. To get their growing business off the ground they hired a supervisor and two wage employees who work as orders are received. The rest of their payroll includes a financial accountant and one office staff who prepare invoices and does other office duties. They have also hired a sales person, but the sales person is paid a salary and not paid based on the number of cakes sold. Of the store front they have rented, 80% is used as the bakery and 20% is used as office space. Your assignment is two-fold: 1. They have asked your team to prepare managerial accounting data of their current operation. They know the amount of ingredients in each cake but do not know how much labor to add to the cost and the amount of overhead to allocate to each cake. The accountant they have hired is good at preparing financial statements they need to give to the bank and prepare taxes and payroll but is not a managerial accountant and is not able to help. They need to know the cost per cake in order to be able to calculate their cost of goods sold. A list of the calculations they would like for you to prepare for them, as well as information concerning next period's operations is on the following page. 2. Michelle and Vishayla are thinking of expanding their operations. They want to build a new bakery that will allow them to expand their operation. The new building will allow them to add more ovens, larger prep and decoration stations, and be able to open a retail store in the front of the building A piece of land is available close to Fort Lee which will give them greater access to military and civilian personnel. They want your team to determine the feasibility of this new venture. The needed calculations and relevant data are on the following pages. Task 1 Michelle and Vishayla need to know the cost per cake so they can be sure they are charging enough for each cake. They also need this to calculate the cost Ol goods sold. They feel 6:07 . LTED X 202-03 FirstName LastName Student ... Task 1 Michelle and Vishayla need to know the cost per cake so they can be sure they are charging enough for cach cake. They also need this to calculate the cost of goods sold. They feel that direct labor hour is the best cost driver for allocating manufacturing overhead. They pay their wage employees $19.00 per hour. Due to the type of production that they have, they believe job order costing is the best costing system Here is the estimated data for 2020 Edited Ausses Sening Price ingredient per cake Nice Requirements: 1) Calculate the cost per cake 2) Create a budgeted Traditional Income Statement and a Contribution Income Statement 3) Calculate the breakeven point in dollars 4) Calculate a target profit in dollars for a profit of $140,000 Task 2 They believe it will cost them S245,000 to purchase the land near Fort Lee and to build a bakery and storefront. Your task 1) Calculate the Return on Investment if the expected increase in Operating income, due to opening the new location near Ft. Lee, is $38,000. 2) Assuming what was stated in 1), calculate the Asset Turnover Rate and Profit Margin if the Expected Sales also increased to $445,000 3) Assuming what is stated in 1) and 2). calculate the Residual Income if the required rate of retum is 14% Prepare a 3 page paper that includes your recommendations and calculations of those 3 pages, 2 pages should be text and I page can be graphs and charts. The paper is a professional presentation to Michelle and Vishayla where you will explain in layman's terms how you calculated cost per unit, breakeven. target profit, ROI, and residual income. As far as the recommendations, explain what you would do to with the company or certain aspects of the company given what you calculate. Your grade will be calculated as follows: Paper Accuracy of calculations 60% Clarity of findings 40% 6:074 .. LED x ne Student Assignment Version 4.doc ... You have been invited to participate in an accounting competition. Your team will be making a presentation to Michelle and Vishayla who are sister's-in-law who have recently opened a bakery specializing in cakes. They realized their love of baking after they married brothers, Josh and Cody. For a few years they created cakes for family and friends. The demand for their cakes had grown to the point where they could no longer use their kitchens as their "hakery." They rented a store front on the Boulevard in Colonial Heights that used to be a diner. It had a kitchen that was converted into a bakery with large ovens, mixing bins, and prep decorating area. The owner made all the conversions for the bakery. They currently sell to individuals, area local stores, and event centers for parties/weddings. To get their growing business off the ground they hired a supervisor and two wage employees who work as orders are received. The rest of their payroll includes a financial accountant and one office staff who prepare invoices and does other office duties. They have also hired a sales person, but the sales person is paid a salary and not paid based on the number of cakes sold. Of the store front they have rented, 80% is used as the bakery and 20% is used as office space. Your assignment is two-fold: 1. They have asked your team to prepare managerial accounting data of their current operation. They know the amount of ingredients in each cake but do not know how much labor to add to the cost and the amount of overhead to allocate to each cake. The accountant they have hired is good at preparing financial statements they need to give to the bank and prepare taxes and payroll but is not a managerial accountant and is not able to help. They need to know the cost per cake in order to be able to calculate their cost of goods sold. A list of the calculations they would like for you to prepare for them, as well as information concerning next period's operations is on the following page. 2. Michelle and Vishayla are thinking of expanding their operations. They want to build a new bakery that will allow them to expand their operation. The new building will allow them to add more ovens, larger prep and decoration stations, and be able to open a retail store in the front of the building A piece of land is available close to Fort Lee which will give them greater access to military and civilian personnel. They want your team to determine the feasibility of this new venture. The needed calculations and relevant data are on the following pages. Task 1 Michelle and Vishayla need to know the cost per cake so they can be sure they are charging enough for each cake. They also need this to calculate the cost Ol goods sold. They feel 6:07 . LTED X 202-03 FirstName LastName Student ... Task 1 Michelle and Vishayla need to know the cost per cake so they can be sure they are charging enough for cach cake. They also need this to calculate the cost of goods sold. They feel that direct labor hour is the best cost driver for allocating manufacturing overhead. They pay their wage employees $19.00 per hour. Due to the type of production that they have, they believe job order costing is the best costing system Here is the estimated data for 2020 Edited Ausses Sening Price ingredient per cake Nice Requirements: 1) Calculate the cost per cake 2) Create a budgeted Traditional Income Statement and a Contribution Income Statement 3) Calculate the breakeven point in dollars 4) Calculate a target profit in dollars for a profit of $140,000 Task 2 They believe it will cost them S245,000 to purchase the land near Fort Lee and to build a bakery and storefront. Your task 1) Calculate the Return on Investment if the expected increase in Operating income, due to opening the new location near Ft. Lee, is $38,000. 2) Assuming what was stated in 1), calculate the Asset Turnover Rate and Profit Margin if the Expected Sales also increased to $445,000 3) Assuming what is stated in 1) and 2). calculate the Residual Income if the required rate of retum is 14% Prepare a 3 page paper that includes your recommendations and calculations of those 3 pages, 2 pages should be text and I page can be graphs and charts. The paper is a professional presentation to Michelle and Vishayla where you will explain in layman's terms how you calculated cost per unit, breakeven. target profit, ROI, and residual income. As far as the recommendations, explain what you would do to with the company or certain aspects of the company given what you calculate. Your grade will be calculated as follows: Paper Accuracy of calculations 60% Clarity of findings 40%