Assignment Cost / Volume / Profit Analysis Assignment Instructions CB203 For this assignment you will pick a local business that is close to you or on your route of travel. You can choose any company, but it should be different from anyone else that you know from class. Take a photo of the outside of the business and include it in your final submission. The Assignment You will attempt to estimate, using reasonable assumptions, what a simplified contribution margin format income statement would look like for the business you choose. For example, Step 1: Estimate how many customers per hour or day they have and guess what the average transaction size might be. It doesn't matter if you are correct, just be reasonable. Use these estimates to forecast annual revenue and annual customer or transaction counts. Step 2: Imagine their expenses and classify them into variable and fixed. List three or four of each. For example, a car repair shop might have the following costs: . Variable: 4 mechanics at $30 per hour including benefits Parts cost at 20% of revenue Utilities to run the power tools $3 per transaction . Fixed: . Employee to answer phone, and deal with customers $40,000 per year including benefits Advertising expense on Google $2,000 per month Monthly rent on the building, $5,000 per month Business taxes paid to city $12,000 per year Step 3: Use this information to build a contribution margin format income statement in Excel that is based on formulas so that you can make changes to volume or margins. Step 4: Adjust your estimates to so profit looks reasonable. If your numbers show them losing a million dollars on one location, you might want to adjust some of your assumptions. Step 5: Using the numbers, calculate the break-even sales S and units values. Step 6: Design a "what if scenario (eg. Increase marketing by $1,000 per month and get 10 new transactions per month) and use a copy your contribution margin income statement to estimate the change in profit. Based on the result, state your recommendation on implementing the change. Marks: . Compiling the income statement with correct format and calculations (5 marks) Reasonableness of assumptions used (1 mark) Correctness of the break-even calculations, given the assumptions. (1 mark) Execution of the scenario and recommendation correctly (2 marks) Overall appearance, clarity, organization, spelling, and grammar (1 mark) Assignment Cost / Volume / Profit Analysis Assignment Instructions CB203 Submission: Submit your photograph and excel file for grading. Make sure each part of your file is well-labelled and your recommendation is displayed prominently. Late assignments will not be accepted, don't wait until the last day to submit your work. You never know if something will come up preventing you from submitting so early submission ensures your grade. Input Details Student Name Student ID # Input Details Selected Business Name Description of Business Activity Display Business Picture Below: Step 1 - Revenue Estimate how many customers per hour or day they have and guess what the average transaction size might be. It doesn't matter if you are correct, just b these estimates to forecast annual revenue and annual customer or transaction counts. Input Stated Assumptions Description # of Customers Average Transaction # of Annual transactions Annual Estimated Revenue Step 2 - Variable/Fixed Expenses Imagine your business' expenses and classify them into variable and fixed. List three or four of each. Variable Expense Description Amount Stated Assumptions Fixed Expense Descri Amount Stated Assumptions Step 3 - Contribution Step 3 - Contribution Margin Income Statement Build a contribution margin format income statement in Excel that is based on formulas so that you can make changes to volume or margins. Income Statement For the Year Ended December 2021 Total Per Unit XXXXXXXXXX Less: XXXXXX Less: XXXXXX XXXXXXXXXX Step 4 - Review / Sense Check Adjust your estimates to so profit looks reasonable. If your numbers show them losing a million dollars on one location, you might want to adjust some of your assumptions. Does your profit look reasonable? Yes No If your business' profit does not look reasonable, go back to Step 3 and adjust it accordingly. Step 5 - Break-Even Calculations Using your company's financials, calculate the break-even sales $ and units values. Clearly label which formulas are being used for the calculations. In the Amount cells, show your work. Formula Used Description Break-Even Sales Amount ($) Formula Used Description Break-Even Sales Amount (units) Step 6 - "What if" Scenario Design a "what if" scenario (eg. Increase marketing by $1,000 per month and get 10 new transactions per month) and use a copy your contribution margin income statement to estimate the change in profit. Based on the result, state your recommendation on implementing the change. Income Statement For the Year Ended December 2021 Step 3 Scenario Per Unit Step 6 Scenario Per Unit Total Total Difference Total Per Unit Revenues Less: Variable Expenses Contribution Margin Less: Fixed Expenses Net Income Recommendation: Below, provide support for your recommendation, substantiated by your analysis. Assignment Cost / Volume / Profit Analysis Assignment Instructions CB203 For this assignment you will pick a local business that is close to you or on your route of travel. You can choose any company, but it should be different from anyone else that you know from class. Take a photo of the outside of the business and include it in your final submission. The Assignment You will attempt to estimate, using reasonable assumptions, what a simplified contribution margin format income statement would look like for the business you choose. For example, Step 1: Estimate how many customers per hour or day they have and guess what the average transaction size might be. It doesn't matter if you are correct, just be reasonable. Use these estimates to forecast annual revenue and annual customer or transaction counts. Step 2: Imagine their expenses and classify them into variable and fixed. List three or four of each. For example, a car repair shop might have the following costs: . Variable: 4 mechanics at $30 per hour including benefits Parts cost at 20% of revenue Utilities to run the power tools $3 per transaction . Fixed: . Employee to answer phone, and deal with customers $40,000 per year including benefits Advertising expense on Google $2,000 per month Monthly rent on the building, $5,000 per month Business taxes paid to city $12,000 per year Step 3: Use this information to build a contribution margin format income statement in Excel that is based on formulas so that you can make changes to volume or margins. Step 4: Adjust your estimates to so profit looks reasonable. If your numbers show them losing a million dollars on one location, you might want to adjust some of your assumptions. Step 5: Using the numbers, calculate the break-even sales S and units values. Step 6: Design a "what if scenario (eg. Increase marketing by $1,000 per month and get 10 new transactions per month) and use a copy your contribution margin income statement to estimate the change in profit. Based on the result, state your recommendation on implementing the change. Marks: . Compiling the income statement with correct format and calculations (5 marks) Reasonableness of assumptions used (1 mark) Correctness of the break-even calculations, given the assumptions. (1 mark) Execution of the scenario and recommendation correctly (2 marks) Overall appearance, clarity, organization, spelling, and grammar (1 mark) Assignment Cost / Volume / Profit Analysis Assignment Instructions CB203 Submission: Submit your photograph and excel file for grading. Make sure each part of your file is well-labelled and your recommendation is displayed prominently. Late assignments will not be accepted, don't wait until the last day to submit your work. You never know if something will come up preventing you from submitting so early submission ensures your grade. Input Details Student Name Student ID # Input Details Selected Business Name Description of Business Activity Display Business Picture Below: Step 1 - Revenue Estimate how many customers per hour or day they have and guess what the average transaction size might be. It doesn't matter if you are correct, just b these estimates to forecast annual revenue and annual customer or transaction counts. Input Stated Assumptions Description # of Customers Average Transaction # of Annual transactions Annual Estimated Revenue Step 2 - Variable/Fixed Expenses Imagine your business' expenses and classify them into variable and fixed. List three or four of each. Variable Expense Description Amount Stated Assumptions Fixed Expense Descri Amount Stated Assumptions Step 3 - Contribution Step 3 - Contribution Margin Income Statement Build a contribution margin format income statement in Excel that is based on formulas so that you can make changes to volume or margins. Income Statement For the Year Ended December 2021 Total Per Unit XXXXXXXXXX Less: XXXXXX Less: XXXXXX XXXXXXXXXX Step 4 - Review / Sense Check Adjust your estimates to so profit looks reasonable. If your numbers show them losing a million dollars on one location, you might want to adjust some of your assumptions. Does your profit look reasonable? Yes No If your business' profit does not look reasonable, go back to Step 3 and adjust it accordingly. Step 5 - Break-Even Calculations Using your company's financials, calculate the break-even sales $ and units values. Clearly label which formulas are being used for the calculations. In the Amount cells, show your work. Formula Used Description Break-Even Sales Amount ($) Formula Used Description Break-Even Sales Amount (units) Step 6 - "What if" Scenario Design a "what if" scenario (eg. Increase marketing by $1,000 per month and get 10 new transactions per month) and use a copy your contribution margin income statement to estimate the change in profit. Based on the result, state your recommendation on implementing the change. Income Statement For the Year Ended December 2021 Step 3 Scenario Per Unit Step 6 Scenario Per Unit Total Total Difference Total Per Unit Revenues Less: Variable Expenses Contribution Margin Less: Fixed Expenses Net Income Recommendation: Below, provide support for your recommendation, substantiated by your analysis