ACC 205 Mini Case 1 Case Description Jasper Company produces widgets that it sells for $62 each, and Joe Jasper, the owner, is contemplating several ideas to grow his business. He has brought his monthly operating budget to you and has asked you to analyze it for him. (See BUDGET page in accompanying EXCEL spreadsheet.) Each unit requires hour of machine time and direct labor. Assembly workers are paid $20 per hour. The machinery is serviced on a regular schedule based on the number of hours each machine runs. Case Problems create a report that addresses the following questions. You can answer the questions in the way that you feel works best, but you must include answers to all 12 questions in your submission, and you must submit your Excel spreadsheet for this mini case (available in the course): 1. The factory utilities cost is a mixed cost. The utilities cost and the number of machine hours is listed on the accompanying EXCEL spreadsheet on the tab "UTILITIES." Determine a cost equation for utilities using SLOPE and INTERCEPT functions in EXCEL - use it to determine budgeted utility costs for this month based on 10,000 units. (Round slope to nearest cent and intercept to nearest $10. 2. Classify the remaining costs as fixed or variable, and document your rationale. 3. Use the results of #2 and #3 to create a budgeted contribution margin income statement for 10,000 units. 4. Compute contribution margin ratio. 5. How many units does a company need to sell to break even? What is the break-even in sales dollars. 6. Create a break-even graph. 7. How many units would have to be sold to achieve an operating income of $20,000? 8. Compute the margin of safety at 10,000 units. 9. If sales volumes increase 20% (from 10,000 units), what is the percentage and dollar amount of increase in profit (use operating leverage to determine). 10. It is projected an increase of $3,000 in advertising costs will lead to the sale of 200 additional units. Should the company do this? Show computations. 11. Lasko Industries has offered the company $48 for 500 units one month. If the company accepts this offer, it will not have to pay sales commissions. The company's capacity is 12,000 units each month, so it will not have to add an additional shift. a. Should the company accept the offer? Provide computations. b. What are some of the qualitative issues management should consider in making this decision? 12. Classify costs as product or period costs and determine the manufacturing cost per unit.

Monthly budget for 10,000 units. Administrative Salaries S 30,000 Advertising 15,000 Assembly labor 100,000 Building rent and janitorial costs (80% related to factory) 20,000 Equipment depreciation 18,000 Factory supplies 4,500 Factory utilities (requirement 1) ??? Insurance (60% related to factory) 8,000 Machine Maintenance 16,100 Material 335,000 Office supplies 2,400 Office utilities 1,200 Sales Commissions 18,600 Sales Salaries 20,000 Supervisors 12,000 Telephone and internet 1,500 602,300Factory utility costs for the prior year Machine hours Utility cost January 4,240 S 3,350 February 4,310 3,500 March 5,630 4,200 April 5,260 4,150 May 4,910 3,850 June 4,790 3,700 July 5,120 4,250 August 5,380 4,300 September 4,830 3,750 October 5,470 4,350 November 5,180 4,100 December 4,430 3,650