Congratulations, the first game was a big success. Attendance was 4,543 and your actual sales were 440 bottles of Pepsi. It is now time to update your spreadsheets for actual sales. Please review your Round 1 spreadsheet and verify that it computes the correct output. Your spreadsheet should have computed revenues of $ 880.00 and net income of $ 137.00. The net cash generated by the game (Sales Rent Tax or Net income + cost of goods sold + breakage) should have totaled $586. This amount, when added to your Schedule 1 cash balance after you purchased your initial inventory is your beginning cash balance for the start of this week. One of many solutions to Project 1 is attached and you may/can/should use this as a starting point for Project 2.

Scenario, Game Two:

Attendance for Game Two is estimated to be 5,200 and the weather is expected to be 55 degrees. For this game, however, you have decided to add hotdogs to your menu. While the 25% of total sales you pay WSU for percentage rentals and the 35% of taxable income/gross profit you pay in Federal income taxes remain the same as last week, you are not confident of the selling price youve set for each hot dog.

• Raw Materials (the hotdog, hotdog bun, rapping materials, etc.) run $1.25 per hotdog.
• Direct labor runs $.25 per hotdog; you had to hire a helper to fix, pre-package and serve the hotdogs at each game, you pay this employee $.25 per hotdog or $68.75 per game. You may assume that for purposes of allocating overhead to the cost of each hotdog, you well sell 1,100 hotdogs and incur $275 in direct labor costs over the remaining 4 games of the season.
• Furthermore, you had to pay $500.00 for an oven to cook the hotdogs and keep them warm during the game.
• Other overhead costs (mustard, salt, napkins, radish, etc. at the Fix-it Up My Way Bar) will cost you $200 for the remainder of the season ($50/game for the four remaining games). In other words, when this $200 is added to the $500.00 in depreciation for the oven, the result is total overhead costs of $700.00 for the remainder of season. This $700.00 in fixed overhead cost will need to be recovered from hotdog sales over the remaining four games of the season.
  • Given this information, you have decided to initially price your hotdogs at $3.50 each.
• Hotdogs are not weather sensitive. In fact, the other vendors tell you that they sell about 1 hotdog for every 15 people in attendance regardless of the temperature. Furthermore, they warn you that hotdogs do not keep well between home games and any unsold hotdogs at the end of each game (i.e. your ending inventory) is normally waste because you cannot sell (at any price) a week old, twice cooked, twice warmed, hotdog that has been sitting in a plastic bag for a week. Remember, your goal is to maximize profit each week and for the entire season.

A summary of facts is provided below:

• You purchase each bottle of Pepsi for $1 each and your selling price is $2 each. For each hotdogs, you pay $1.25 in material and $.25 in direct labor costs. Your total overhead costs are expected to be $700 for the remainder of the season (4 games). Direct labor costs are expected to be $275.00 and you expect to sale 1,100 hotdogs over the remainder of the season. Overhead should be allocated based on direct labor costs.
  • You must pay WSU 25% of sales as rent for your stand at the game. You must also pay the US Government 35% of taxable income/gross profit in Federal Income Taxes.
  • Historically you know that the weather and attendance are the two primary drivers of sales volume for Pepsi. On average you sell 1 bottle of Pepsi for every 10 people in attendance. When the outside temperature is below 40 degrees, that ratio goes to one Pepsi for every 20 individuals in attendance; if its over 80 degrees, the ratio goes to 1 bottle for every 5 individuals. This is the same as last weeks game. Hotdogs, however, are not temperature sensitive, on average you can expect to sell 1 hotdog for every 15 people in attendance.
  • Theft/breakage (shrinkage) related to Pepsi remains the same ratio as last weeks game.
  • Theft/breakage (shrinkage) related to hotdogs is also an issue; on average one hotdog is dropped, stolen, or eaten by your helper for every 75 sold. This must be included as part of your cost of goods sold, along with any waste for unsold hotdogs at the end of the game.
  • Other assumptions include:
  • Your ending inventory from last weeks game is your beginning inventory for this week,
  • Expected attendance for Game two is 5,200 and the outside temperature is expected to be 55 degrees.
  • The equipment is debt free because you contributed it into the business as a contribution of capital.

ASSIGNMENT DELIVERABLE: Included in Blackboard is one potential solution to Project 1. You may/should use this as a starting point for this Project or update your two Project 1 Excel spreadsheets.

As before, your spreadsheets must use internal formulas, summations, etc. to keep track of the requested information and inputs must be kept to only those discussed below under Inputs. (With the exception of beginning cash and beginning inventory which should be transferred from (or computed from) last weeks schedules.

The first section is your initial Expectations for Purchases and Budgeted Cash Balances.

Your inputs should be:

• Beginning cash (ending cash from last weeks game). Remember, your ending cash balance from Schedule 2 in last weeks schedule should be your beginning cash balance for this weeks game.
• Beginning inventory of Pepsi in units (your ending Pepsi inventory from last weeks game),
• Expected attendance, and
• Weather,
• Total overhead costs and total estimated labor costs (you may assume estimated direct labor costs are actual direct labor costs)
• You have no beginning inventory in hotdogs.
• As before you will need to estimate your desired ending inventory of Pepsi and hotdogs in order to compute your purchases.

Your schedules output should be:

• Quantity of Pepsi to purchase (in units and cash - determined as expected sales less beginning inventory plus desired ending inventory). You may elect to include breakage into this calculation),
• Quantity of hotdogs to purchase, in units and cash - determined as expected sales less beginning inventory plus desired ending inventory). You may elect to include breakage into this calculation,
• Your pre-determined overhead rate, and
• Ending cash (beginning cash less purchases).

The second portion of your schedule should be your Modified Income/Cash Balance Statement.

Your inputs should be:

• Pepsi Units Sold,
• Hotdog Units Sold

Your output should be:

• Pepsi Revenues for the game (units sold X sales price). Remember, you cannot sell more than is on hand, after breakage,
• Less, Pepsi Cost of Goods Sold (adjusted for shrinkage (breakage), assuming expected shrinkage is actual shrinkage computed as ([units sold adjusted for units of breakage] X cost per unit). Remember, cost of goods sold should be based on the number of items actually sold. Breakage and waste may be shown as a separate line item apart from cost of goods sold and should be c0mputed as a percentage of units actually sold,
• Hotdog Revenues for the game (units X sales price). Remember, you cannot sell more than is on hand, after breakage,
• Less, Hotdog cost of goods sold (adjusted for shrinkage and waste, assuming expected shrinkage is actual shrinkage, computed as (units sold adjusted for units of breakage and waste) X cost per hotdog. As with Pepsi, breakage and waste may be shown as a separate line item apart from cost of goods sold. Cost of each hotdog includes materials, labor, and allocated overhead and based on the number of items actually sold,
• Less, the percentage Fee Paid to WSU (revenues X 25%),
• To arrive at Taxable Income/Gross Profit,
• Less Federal Income Tax (Taxable Income X 35%),
• To arrive at Net Income (Taxable Income less Federal Income Tax).
• This net income, together with the cost basis recovery of units sold and breakage, can be assumed to be your net increase/decrease in cash for the period and should be added to your beginning cash from Schedule 1, to arrive at your ending cash balance. This will become your beginning cash balance for next weeks game. You may elect to calculate cash on any number of acceptable methods.

Congratulations, the first game was a big success. Attendance was 4,543 and your actual sales were 440 bottles of Pepsi. It is now time to update your spreadsheets for actual sales. Please review your Round 1 spreadsheet and verify that it computes the correct output. Your spreadsheet should have computed revenues of $ 880.00 and net income of $ 137.00. The net cash generated by the game (Sales Rent Tax or Net income + cost of goods sold + breakage) should have totaled $586. This amount, when added to your Schedule 1 cash balance after you purchased your initial inventory is your beginning cash balance for the start of this week. One of many solutions to Project 1 is attached and you may/can/should use this as a starting point for Project 2.

Scenario, Game Two:

Attendance for Game Two is estimated to be 5,200 and the weather is expected to be 55 degrees. For this game, however, you have decided to add hotdogs to your menu. While the 25% of total sales you pay WSU for percentage rentals and the 35% of taxable income/gross profit you pay in Federal income taxes remain the same as last week, you are not confident of the selling price youve set for each hot dog.

• Raw Materials (the hotdog, hotdog bun, rapping materials, etc.) run $1.25 per hotdog.
• Direct labor runs $.25 per hotdog; you had to hire a helper to fix, pre-package and serve the hotdogs at each game, you pay this employee $.25 per hotdog or $68.75 per game. You may assume that for purposes of allocating overhead to the cost of each hotdog, you well sell 1,100 hotdogs and incur $275 in direct labor costs over the remaining 4 games of the season.
• Furthermore, you had to pay $500.00 for an oven to cook the hotdogs and keep them warm during the game.
• Other overhead costs (mustard, salt, napkins, radish, etc. at the Fix-it Up My Way Bar) will cost you $200 for the remainder of the season ($50/game for the four remaining games). In other words, when this $200 is added to the $500.00 in depreciation for the oven, the result is total overhead costs of $700.00 for the remainder of season. This $700.00 in fixed overhead cost will need to be recovered from hotdog sales over the remaining four games of the season.
  • Given this information, you have decided to initially price your hotdogs at $3.50 each.
• Hotdogs are not weather sensitive. In fact, the other vendors tell you that they sell about 1 hotdog for every 15 people in attendance regardless of the temperature. Furthermore, they warn you that hotdogs do not keep well between home games and any unsold hotdogs at the end of each game (i.e. your ending inventory) is normally waste because you cannot sell (at any price) a week old, twice cooked, twice warmed, hotdog that has been sitting in a plastic bag for a week. Remember, your goal is to maximize profit each week and for the entire season.

A summary of facts is provided below:

• You purchase each bottle of Pepsi for $1 each and your selling price is $2 each. For each hotdogs, you pay $1.25 in material and $.25 in direct labor costs. Your total overhead costs are expected to be $700 for the remainder of the season (4 games). Direct labor costs are expected to be $275.00 and you expect to sale 1,100 hotdogs over the remainder of the season. Overhead should be allocated based on direct labor costs.
  • You must pay WSU 25% of sales as rent for your stand at the game. You must also pay the US Government 35% of taxable income/gross profit in Federal Income Taxes.
  • Historically you know that the weather and attendance are the two primary drivers of sales volume for Pepsi. On average you sell 1 bottle of Pepsi for every 10 people in attendance. When the outside temperature is below 40 degrees, that ratio goes to one Pepsi for every 20 individuals in attendance; if its over 80 degrees, the ratio goes to 1 bottle for every 5 individuals. This is the same as last weeks game. Hotdogs, however, are not temperature sensitive, on average you can expect to sell 1 hotdog for every 15 people in attendance.
  • Theft/breakage (shrinkage) related to Pepsi remains the same ratio as last weeks game.
  • Theft/breakage (shrinkage) related to hotdogs is also an issue; on average one hotdog is dropped, stolen, or eaten by your helper for every 75 sold. This must be included as part of your cost of goods sold, along with any waste for unsold hotdogs at the end of the game.
  • Other assumptions include:
  • Your ending inventory from last weeks game is your beginning inventory for this week,
  • Expected attendance for Game two is 5,200 and the outside temperature is expected to be 55 degrees.
  • The equipment is debt free because you contributed it into the business as a contribution of capital.

ASSIGNMENT DELIVERABLE: Included in Blackboard is one potential solution to Project 1. You may/should use this as a starting point for this Project or update your two Project 1 Excel spreadsheets.

As before, your spreadsheets must use internal formulas, summations, etc. to keep track of the requested information and inputs must be kept to only those discussed below under Inputs. (With the exception of beginning cash and beginning inventory which should be transferred from (or computed from) last weeks schedules.

The first section is your initial Expectations for Purchases and Budgeted Cash Balances.

Your inputs should be:

• Beginning cash (ending cash from last weeks game). Remember, your ending cash balance from Schedule 2 in last weeks schedule should be your beginning cash balance for this weeks game.
• Beginning inventory of Pepsi in units (your ending Pepsi inventory from last weeks game),
• Expected attendance, and
• Weather,
• Total overhead costs and total estimated labor costs (you may assume estimated direct labor costs are actual direct labor costs)
• You have no beginning inventory in hotdogs.
• As before you will need to estimate your desired ending inventory of Pepsi and hotdogs in order to compute your purchases.

Your schedules output should be:

• Quantity of Pepsi to purchase (in units and cash - determined as expected sales less beginning inventory plus desired ending inventory). You may elect to include breakage into this calculation),
• Quantity of hotdogs to purchase, in units and cash - determined as expected sales less beginning inventory plus desired ending inventory). You may elect to include breakage into this calculation,
• Your pre-determined overhead rate, and
• Ending cash (beginning cash less purchases).

The second portion of your schedule should be your Modified Income/Cash Balance Statement.

Your inputs should be:

• Pepsi Units Sold,
• Hotdog Units Sold

Your output should be:

• Pepsi Revenues for the game (units sold X sales price). Remember, you cannot sell more than is on hand, after breakage,
• Less, Pepsi Cost of Goods Sold (adjusted for shrinkage (breakage), assuming expected shrinkage is actual shrinkage computed as ([units sold adjusted for units of breakage] X cost per unit). Remember, cost of goods sold should be based on the number of items actually sold. Breakage and waste may be shown as a separate line item apart from cost of goods sold and should be c0mputed as a percentage of units actually sold,
• Hotdog Revenues for the game (units X sales price). Remember, you cannot sell more than is on hand, after breakage,
• Less, Hotdog cost of goods sold (adjusted for shrinkage and waste, assuming expected shrinkage is actual shrinkage, computed as (units sold adjusted for units of breakage and waste) X cost per hotdog. As with Pepsi, breakage and waste may be shown as a separate line item apart from cost of goods sold. Cost of each hotdog includes materials, labor, and allocated overhead and based on the number of items actually sold,
• Less, the percentage Fee Paid to WSU (revenues X 25%),
• To arrive at Taxable Income/Gross Profit,
• Less Federal Income Tax (Taxable Income X 35%),
• To arrive at Net Income (Taxable Income less Federal Income Tax).
• This net income, together with the cost basis recovery of units sold and breakage, can be assumed to be your net increase/decrease in cash for the period and should be added to your beginning cash from Schedule 1, to arrive at your ending cash balance. This will become your beginning cash balance for next weeks game. You may elect to calculate cash on any number of acceptable methods.

ACC 3020 Fall 2015 Name: Aplus Student Game 1 Game 2 Pre-Game purchases and preparation -------------------------------------------------------------------------Inputs Beginning cash $ 1,000 Beginning inventory in units 100 Expected attendance 4,000 Weather 70 Desired ending inventory (student determined) 100 Purchase price of units $ 1.00 Sales price of units $ 2.00 Pre-Game purchases and preparation $ 1,186 51 2,000 70 0 ### ### Outputs Units Dollars 400 $ 400 500 $ 500 $ 600 Quantity to purchase Total quantity on hand Cash after purchases After Game Results Units Dollars 149 $ 149 200 $ 200 $ 1,037 --------------------------------------------------------------------------------------- After Game Results Inputs Units sold (assuming you had sufficent inventory) 440 0 Outputs Revenues (limited to quantity on hand less Breakage) Cost of goods sold Sold Breakage Percentage rents to WSU Taxable income Income taxes Net income Add cost of goods sold plus breakage Cash going into game Cash after game $ 880 $ (440) (9) (220) 211 74 137 449 600 $ 1,186 ======= 0 0 0 0 0 586 0 0 1,037 $ 1,037 ======= 0