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A calculation of break-even point (in bottles) for the year ended August 31, 2020. Clearly identify your assumption regarding the sales mix in your calculation

  1. A calculation of break-even point (in bottles) for the year ended August 31, 2020. Clearly identify your assumption regarding the sales mix in your calculation and specify why this assumption is important in the context of CVP analysis. (Chartered Professional Accountant (CPA))
  2. A listing and justification of other potential cost pools and cost drivers that could be used by JHCF, in addition to the cost pools and cost drivers listed in Table 6. Should Jenna switch to ABC at JHCF? Identify Pros and Cons of implementing ABC by Jenna. image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
Jenna's Happy Cow Farm (JHCF). Jenna family had a crop farm of just under 300 hectares - 90% of the land certified organic - Asecondary line of business (up to 25% of total revenues and costs) was a beef cow/calf operation, where they bought in stocker calves to raise. - Another minor line of business (less than 3%), which was operated by her mother, comprised of raising laying chickens and turkeys in the summer. By 2020 she had a total of 100 heads (80 milking cows and 20 calves. She is considering expanding the operations but production is currently limited by the number and size of the facilities on site that can only accommodate 200 animals (of which 80 cows are part of the milking herd). The direct cost of packaging the product (now $0.75 per bottle) would be about one-third the current cost, and the cost of the bottling equipment for filling the plastic or paper containers would fall to one-half the cost of the current equipment within 6 months' time. Table 1 Table 1: Attribute Importance Ranking, by Product Whole Low-Fat Skim Chocolate Buying Criteria Milk Milk Milk Milk Freshness 3 3 2 4 Packaging 4 5 4 5 Taste 2 2 3 1 Color and Texture 5 4 5 3 Price 1 1 1 2 Eggnog 4 3 1 UN 2 5 Trade journals in dairy farming: It shows the buying criteria of a sample of supermarket customers who were purchasing milk in plastic and paper containers (1 = most important, and 5 = least important). The current supermarket prices for these products in Vancouver Island are $1.25 per quart for each product except eggnog which sells for $1.80. Supermarkets mark up the price of milk by about 40% from dairy cost, so the price received by dairy is somewhat less. The Main Processes Involved in Milk Production 1.Milking 2.Separating 3.Pasteurizing: 4.Homogenizing 5.Mixing 6.Bottling 7.Warehousing The most recent year ended August, 31, 2020 are provided in Table 2 Jenna's Happy Cows Farm Table 2: Selected Data for the Most Recent Year Ended August 31, 13* Whole Low-Fat Skim Chocolate Milk Milk Milk Milk Eggnog 145 500 333 455 525 Nuinber of Invoices 292.000 730,000 511,000 219.000 187,000 Number of Bottles Produced 373 933 653 290 270 Nuinber of Purchase Orders 66 85 71 43 Number of Customers 16G 304 236 144 135 Labor Hours, Warehousing 2 4 Number of Quality Checks per Order 87 315 132 112 Machine I lours, Separating 0 0 0 385 355 Machine Hours, Mixing 199 312 187 177 Machine Hours, Bottling 98 312 177 88 122 Labor Hours, Clean and Repair 48 422 433 * Bottles are produced in one size - quarts. The products produced by JIICT and current prices received by JHCF are as follows: Whole Milk, $1.90 per quart Low-Fat Milk, $1.90 Skim Milk, $1.90 Chocolate Milk, $1.90 Eggnog, $2.25 The accounts, sub-accounts and costs for the macrecent operating year ended August 31, 2020 are shown in Table 3. Jenna's Happy Cows Farm Table 3: Overhead (Resource) Costs for Year Ended August 31, 13 ACCOUNTS SUB ACCOUNTS ACTUAL COSTS Bottling Equipincut $1,528,620 Other Facilities Costs Utilities 72,3951 Depreciation 22,976 Property Tax 10.014 Total Other Facilities Cost $105,385 Other Processing Costs Labor and materials 428.800 Supplies 4,278 Equipment repairs and maintenance 21,565 Depreciation 13,688 Total Other Processing Cost $ 468,331 General and Administrative Administration 105,522 Interest Expense 23,471 Total General and Administrative $ 128,993 Total $ 2,231,329 Each glass bottle costs us $0.75, including both purchase and recycling cost. Other ingredients include cocoa, sugar, and spices. Cocoa, used in the production of chocolate milk, costs $0.05 per bottle. Sugar, used in both chocolate milk and eggnog, costs $0.05 per bottle. Spices and eggs used to make eggnog, cost $0.08 per bottle. During the most recent year, in total, 65,700 ounces of sugar and cocoa were used in the production of chocolate milk and 76,650 ounces of sugar and spice and 15,600 dozen eggs were used in the production of eggnog. Eight activities related to production and sales in Table 4 Jenna's Happy Cows Farm Table 4: Estimates for the Other Processing Costs Account % Usage of Other Activities Using Other Processing Costs Processing Costs Milking Separating/Pasteurizing/Tomogenizing Mixing Bottling Warehousing G&A Receiving and Inspecting Ingredients 0 % Cleaning and Repairs 5% Total 100% 30% 1.5 15% 2596 10% 0 The other facilities cost account includes the costs of maintaining the warehouse and milking barn, and is allocated to the activities on the basis of square feet. Jenna's Happy Cows Farm Table 5: Square Footage Occupied by Each Activity Square Ft Activities Milking Separating/Pasteurizing/Homogenizing Mixing Bottling Warehousing G&A Cleaning and Repairs Total 10,000 2,000 1,000 1,500 12,500 2,000 1,000 30,000 The best way to allocate the costs of each activity to the products was to use the activity-consumption drivers identified in Table 6 Jenna's Happy Cows Farm Table 6: Overhead (Resource)-Consumption Cost Drivers Activities Activity-consumption Cost Driver Milking Number of bottles produced Separating/Pasteurizing/Homogenizing Machine Hours, Separating Mixing Machine Hours, Mixing Bottling Machine Hours, Bottling Warehousing Labor Hours, Warehousing G&A Number of Invoices Receiving and Inspecting Ounces Cleaning and Repairs Labor Hours, Clean and Repair 1. A calculation of break-even point (in bottles) for the year ended August 31, 2020. Clearly identify your assumption regarding the sales mix in your calculation and specify why this assumption is important in the context of CVP analysis. (Chartered Professional Accountant (CPA)) 2. A listing and justification of other potential cost pools and cost drivers that could be used by JHCF, in addition to the cost pools and cost drivers listed in Table 6. Should Jenna switch to ABC at JHCF? Identify Pros and Cons of implementing ABC by Jenna. Note: Need to apply ABC to determine the costs of each one of the five product lines. The first step is to identify the resources that should be allocated to each one of the eight activities based on Jenna's previous discussion and the consumption ratios in Tables 4 and 5. The second step to assign the cost of each one of the eight activities to the five product lines based on the ggested cost drivers identified in Table 6. At the end, you would know if my math is correct or not because the total net income of the five product lines combined should equal to the net income of August 31, 2020. There are good if we had better cost drivers in the future than the one Jenna suggested in Table 6. Jenna's Happy Cow Farm (JHCF). Jenna family had a crop farm of just under 300 hectares - 90% of the land certified organic - Asecondary line of business (up to 25% of total revenues and costs) was a beef cow/calf operation, where they bought in stocker calves to raise. - Another minor line of business (less than 3%), which was operated by her mother, comprised of raising laying chickens and turkeys in the summer. By 2020 she had a total of 100 heads (80 milking cows and 20 calves. She is considering expanding the operations but production is currently limited by the number and size of the facilities on site that can only accommodate 200 animals (of which 80 cows are part of the milking herd). The direct cost of packaging the product (now $0.75 per bottle) would be about one-third the current cost, and the cost of the bottling equipment for filling the plastic or paper containers would fall to one-half the cost of the current equipment within 6 months' time. Table 1 Table 1: Attribute Importance Ranking, by Product Whole Low-Fat Skim Chocolate Buying Criteria Milk Milk Milk Milk Freshness 3 3 2 4 Packaging 4 5 4 5 Taste 2 2 3 1 Color and Texture 5 4 5 3 Price 1 1 1 2 Eggnog 4 3 1 UN 2 5 Trade journals in dairy farming: It shows the buying criteria of a sample of supermarket customers who were purchasing milk in plastic and paper containers (1 = most important, and 5 = least important). The current supermarket prices for these products in Vancouver Island are $1.25 per quart for each product except eggnog which sells for $1.80. Supermarkets mark up the price of milk by about 40% from dairy cost, so the price received by dairy is somewhat less. The Main Processes Involved in Milk Production 1.Milking 2.Separating 3.Pasteurizing: 4.Homogenizing 5.Mixing 6.Bottling 7.Warehousing The most recent year ended August, 31, 2020 are provided in Table 2 Jenna's Happy Cows Farm Table 2: Selected Data for the Most Recent Year Ended August 31, 13* Whole Low-Fat Skim Chocolate Milk Milk Milk Milk Eggnog 145 500 333 455 525 Nuinber of Invoices 292.000 730,000 511,000 219.000 187,000 Number of Bottles Produced 373 933 653 290 270 Nuinber of Purchase Orders 66 85 71 43 Number of Customers 16G 304 236 144 135 Labor Hours, Warehousing 2 4 Number of Quality Checks per Order 87 315 132 112 Machine I lours, Separating 0 0 0 385 355 Machine Hours, Mixing 199 312 187 177 Machine Hours, Bottling 98 312 177 88 122 Labor Hours, Clean and Repair 48 422 433 * Bottles are produced in one size - quarts. The products produced by JIICT and current prices received by JHCF are as follows: Whole Milk, $1.90 per quart Low-Fat Milk, $1.90 Skim Milk, $1.90 Chocolate Milk, $1.90 Eggnog, $2.25 The accounts, sub-accounts and costs for the macrecent operating year ended August 31, 2020 are shown in Table 3. Jenna's Happy Cows Farm Table 3: Overhead (Resource) Costs for Year Ended August 31, 13 ACCOUNTS SUB ACCOUNTS ACTUAL COSTS Bottling Equipincut $1,528,620 Other Facilities Costs Utilities 72,3951 Depreciation 22,976 Property Tax 10.014 Total Other Facilities Cost $105,385 Other Processing Costs Labor and materials 428.800 Supplies 4,278 Equipment repairs and maintenance 21,565 Depreciation 13,688 Total Other Processing Cost $ 468,331 General and Administrative Administration 105,522 Interest Expense 23,471 Total General and Administrative $ 128,993 Total $ 2,231,329 Each glass bottle costs us $0.75, including both purchase and recycling cost. Other ingredients include cocoa, sugar, and spices. Cocoa, used in the production of chocolate milk, costs $0.05 per bottle. Sugar, used in both chocolate milk and eggnog, costs $0.05 per bottle. Spices and eggs used to make eggnog, cost $0.08 per bottle. During the most recent year, in total, 65,700 ounces of sugar and cocoa were used in the production of chocolate milk and 76,650 ounces of sugar and spice and 15,600 dozen eggs were used in the production of eggnog. Eight activities related to production and sales in Table 4 Jenna's Happy Cows Farm Table 4: Estimates for the Other Processing Costs Account % Usage of Other Activities Using Other Processing Costs Processing Costs Milking Separating/Pasteurizing/Tomogenizing Mixing Bottling Warehousing G&A Receiving and Inspecting Ingredients 0 % Cleaning and Repairs 5% Total 100% 30% 1.5 15% 2596 10% 0 The other facilities cost account includes the costs of maintaining the warehouse and milking barn, and is allocated to the activities on the basis of square feet. Jenna's Happy Cows Farm Table 5: Square Footage Occupied by Each Activity Square Ft Activities Milking Separating/Pasteurizing/Homogenizing Mixing Bottling Warehousing G&A Cleaning and Repairs Total 10,000 2,000 1,000 1,500 12,500 2,000 1,000 30,000 The best way to allocate the costs of each activity to the products was to use the activity-consumption drivers identified in Table 6 Jenna's Happy Cows Farm Table 6: Overhead (Resource)-Consumption Cost Drivers Activities Activity-consumption Cost Driver Milking Number of bottles produced Separating/Pasteurizing/Homogenizing Machine Hours, Separating Mixing Machine Hours, Mixing Bottling Machine Hours, Bottling Warehousing Labor Hours, Warehousing G&A Number of Invoices Receiving and Inspecting Ounces Cleaning and Repairs Labor Hours, Clean and Repair 1. A calculation of break-even point (in bottles) for the year ended August 31, 2020. Clearly identify your assumption regarding the sales mix in your calculation and specify why this assumption is important in the context of CVP analysis. (Chartered Professional Accountant (CPA)) 2. A listing and justification of other potential cost pools and cost drivers that could be used by JHCF, in addition to the cost pools and cost drivers listed in Table 6. Should Jenna switch to ABC at JHCF? Identify Pros and Cons of implementing ABC by Jenna. Note: Need to apply ABC to determine the costs of each one of the five product lines. The first step is to identify the resources that should be allocated to each one of the eight activities based on Jenna's previous discussion and the consumption ratios in Tables 4 and 5. The second step to assign the cost of each one of the eight activities to the five product lines based on the ggested cost drivers identified in Table 6. At the end, you would know if my math is correct or not because the total net income of the five product lines combined should equal to the net income of August 31, 2020. There are good if we had better cost drivers in the future than the one Jenna suggested in Table 6

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