How can I calculate all variable costs , sales price, contribution margin , break even point, target units and more?
Sales Price, Costs of Ingredients, Manufacturing Overhead, and Operating Expenses Sales price based on mark-up on total variable costs: 200% Direct Labor Costs: Hourly wage for labor (includes taxes and benefits) Hours of labor per batch $12.63 0.15 Manufacturing Overhead: Fixed Costs (per month); Variable costs (per batch): $0.10 $0.15 Utilities Other indirect materials and labor Maintenance Depreciation on cooking equipment Supervision Totals $50 $250 $2,500 $2,800 $0.25 Operating Expenses: Fixed Costs (per month): Variable costs (per batch): $0.25 $0.10 Sales Commission Shipping Costs Salaries Depreciation on sales and marketing equipment Other Totals $2,000 $200 $800 $3,000 $0.35 Ingredients Total DM Cost Ingredient Cost 1.5 C All purpose Flour $ .5 C Butter $ 1 Large Egg $ 1.5 TSP Vanilla Extract $ 3 cups Powdered Sugar $ 0.12 0.62 0.11 0.40 0.51 1/2 cup butter, softened $ 3 cups powdered sugar, divided Total Cost Per Batch Total Cookies Made Cost Per Cookie Cost Per Dozen 1.76 30 0.06 0.70 $ $ 1 large egg 1 1/2 teaspoons vanilla extract Total DL Cost Cost Per Dozen 0.11 1 1/2 cups all-purpose flour ASSIGNMENT You immediately realize that you must gain an understanding of your cost structure and of the relationship between your revenues, costs, and profits. You pull out Grandma's recipe to see what ingredients it takes to make a dozen cookies. Next, you go to your invoice files to determine the cost of each of the ingredients. You brainstorm to develop a list of the new costs that you must incur when you expand your operations. After analyzing all of this data you are able to break out your costs into several categories. You realize that some costs are for raw materials while others are related to manufacturing overhead or operating expenses. You also realize that some costs appear to be fixed while other costs are variable. Now you have sufficient information to determine how much money you can make when you sell these cookies. Requirements 1. Think of your favorite cookie recipe or search the Internet and find a recipe for a cookie. This recipe will be your "Grandma's recipe that you make and sell in your business. Include a screenshot or picture of this recipe in your final deliverable. You must consult your recipe to determine the amount of ingredients required for one batch of cookies. You also must consult Exhibit 1 for information regarding the costs of ingredients, manufacturing overhead, and operating expenses. If your cookies have ingredients that are not included in Exhibit 1, these ingredients are considered part of overhead. Note that your recipe may make more cookies than one dozen. You will need to adjust this in your calculations. You will make the recipe as listed, but sell the cookies in sets of 12. For example, if your recipe makes 36 cookies in a batch, you will need to account for this in your problem as this one batch will result in three units of cookies to sell. 2. Calculate the following (in Excel): a. Total variable costs per dozen cookies b. Sales price per dozen cookies. C. Contribution margin per dozen cookies. d. Breakeven point for one month of operations in dollars and in units (units should be per dozen). e. Target units needed to achieve an operating income of $10,000 per month. f. Using the following sales in units, prepare a contribution margin income statement for the first three months of operations, and the quarter. i. January: First four of your Spartan ID ii. February: Last four of your Spartan ID iii. March: Last for digits of your phone number Sales Price, Costs of Ingredients, Manufacturing Overhead, and Operating Expenses Sales price based on mark-up on total variable costs: 200% Direct Labor Costs: Hourly wage for labor (includes taxes and benefits) Hours of labor per batch $12.63 0.15 Manufacturing Overhead: Fixed Costs (per month); Variable costs (per batch): $0.10 $0.15 Utilities Other indirect materials and labor Maintenance Depreciation on cooking equipment Supervision Totals $50 $250 $2,500 $2,800 $0.25 Operating Expenses: Fixed Costs (per month): Variable costs (per batch): $0.25 $0.10 Sales Commission Shipping Costs Salaries Depreciation on sales and marketing equipment Other Totals $2,000 $200 $800 $3,000 $0.35 Ingredients Total DM Cost Ingredient Cost 1.5 C All purpose Flour $ .5 C Butter $ 1 Large Egg $ 1.5 TSP Vanilla Extract $ 3 cups Powdered Sugar $ 0.12 0.62 0.11 0.40 0.51 1/2 cup butter, softened $ 3 cups powdered sugar, divided Total Cost Per Batch Total Cookies Made Cost Per Cookie Cost Per Dozen 1.76 30 0.06 0.70 $ $ 1 large egg 1 1/2 teaspoons vanilla extract Total DL Cost Cost Per Dozen 0.11 1 1/2 cups all-purpose flour ASSIGNMENT You immediately realize that you must gain an understanding of your cost structure and of the relationship between your revenues, costs, and profits. You pull out Grandma's recipe to see what ingredients it takes to make a dozen cookies. Next, you go to your invoice files to determine the cost of each of the ingredients. You brainstorm to develop a list of the new costs that you must incur when you expand your operations. After analyzing all of this data you are able to break out your costs into several categories. You realize that some costs are for raw materials while others are related to manufacturing overhead or operating expenses. You also realize that some costs appear to be fixed while other costs are variable. Now you have sufficient information to determine how much money you can make when you sell these cookies. Requirements 1. Think of your favorite cookie recipe or search the Internet and find a recipe for a cookie. This recipe will be your "Grandma's recipe that you make and sell in your business. Include a screenshot or picture of this recipe in your final deliverable. You must consult your recipe to determine the amount of ingredients required for one batch of cookies. You also must consult Exhibit 1 for information regarding the costs of ingredients, manufacturing overhead, and operating expenses. If your cookies have ingredients that are not included in Exhibit 1, these ingredients are considered part of overhead. Note that your recipe may make more cookies than one dozen. You will need to adjust this in your calculations. You will make the recipe as listed, but sell the cookies in sets of 12. For example, if your recipe makes 36 cookies in a batch, you will need to account for this in your problem as this one batch will result in three units of cookies to sell. 2. Calculate the following (in Excel): a. Total variable costs per dozen cookies b. Sales price per dozen cookies. C. Contribution margin per dozen cookies. d. Breakeven point for one month of operations in dollars and in units (units should be per dozen). e. Target units needed to achieve an operating income of $10,000 per month. f. Using the following sales in units, prepare a contribution margin income statement for the first three months of operations, and the quarter. i. January: First four of your Spartan ID ii. February: Last four of your Spartan ID iii. March: Last for digits of your phone number
