I could use some help with a memo to management regarding a quantitative analysis of the attached information. This class has been somewhat of a challenge and I appreciate all assistance.

Prepare a Memo to Management a) Summarize your quantitative analysis based on your findings (include answers to all questions in Sections I, II, and III). b) Report the parts of the budgeting process that are in need of improvement. Provide suggestions to improve those parts. c) Report overall improvement recommendations to management. Consider the ethical implications when communicating sensitive information.

1 MILESTONE 3 COSTING SYSTEMS a) The best cost allocation system that would benefit this company would be Activity Based Costing. The reason for this is that the costing system enables the identification of activities performed by the company and assigned indirect cost to the identified activities efficiently and effectively. The costing system also will enable the company to identify profitable activities that much financial resources would then be directed towards. b) The Activity Based Costing system does meet the management planning and control goals because it enables the company to assign direct cost to the product less arbitrarily than the tradition method. The costing system also meets the management planning and control because it organizes and allocates costs involved in production in the company. The system further meets the planning and control because it enhances waste identification in the company hence control. c) The ethical implications that should be considered in Activity Based Costing System are costing and monitoring of activities efficiently and effectively. This involves tracing of the resources consumption of every activity and the final output costing hence better pricing of the products will be highly enhanced. The costing system focuses on the cost drivers and the activities that cause the costs in the company to increase. d) The direct costs are the activities that benefit a specific project whereas the indirect costs are activities that benefit many projects in the company. The direct costs are easy to assign to the activities of the company while indirect cost on the hand are more complicated to assign to the activities of the company. The considerations that should be made when selecting one of the costs are the ease of tracing them in the activities 2 performed by the company and the ease of assigning them to the various activities as well as the output of the company. 3 REFERENCES Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning. Kaplan, R., & Anderson, S. R. (2013). Time-driven activity-based costing: a simpler and more powerful path to higher profits. Harvard business press. Eastman, C. M. (Ed.). (2012). Design for X: concurrent engineering imperatives. Springer Science & Business Media. Milestone One, Part I Product Costs Materials - Cedar Materials - Plastic Materials - Indirect Factory Worker Labor Factory Depreciation Factory Utilities Factory Maintenance and Repairs Period Costs Shipping Sales Commission Office Rent Advertising Liability Insurance Office Depreciation Office Salaries Milestone One, Part II Use Table I on the MDE Manufacturing Budget to complete your calculations. Units Total Sales BUDGETED 50,000 1,050,000 Variable Costs Materials - Cedar Materials - Plastic Factory Worker Labor Materials - Indirect Shipping ($2.25/ea) Per Unit $ 21.00 225,000 37,500 300,000 3,000 112,500 4.50 0.75 6.00 0.06 2.25 Sales Commissions ($2/unit sold) Total Variable Expense 100,000 778,000.00 2.00 15.56 Contribution Margin 272,000.00 $ 5.44 78,000 12,000 5,000 12,000 20,000 5,000 1,000 48,000 181,000 1.56 0.24 0.10 Fixed Costs Factory Depreciation Factory Utilities Factory Maintenance and Repairs Office Rent Advertising Liability Insurance Office Depreciation Office Salaries Total Fixed Costs Profit 3.62 91,000.00 c) Compute contribution margin per unit and contribution margin ratio Compute contribution margin per unit contribution margin ratio= Contribution/Sales $ 5.44 0.259 Determine the breakeven quantity and the breakeven revenue accurately breakeven quantity =Fixed Cost/Contrbution Per Unit Breakeven revenue=Fixed Cost/Contrbution Margin 33,272 units $ 698,713.24 Quantity Sold to earn 10,000 profit Sales Dollars to earn 10,000 profit Using Budgeted Amounts Breakeven Point - Using Actual Amounts 35,110 units $ 737,316.18 Fixed cost Contribution margin per unit 181,000 5.44 Fixed cost + 10,000 Contribution margin per unit 10,000 3.63 Fixed cost + 10,000 47,000 units sold 10,000 47000 Determine if the company is breaking even. What are cost-volume-profit analysis implications on short-term planning? At Break even Profit Will be Zero ie NoProfit No Loss cost-volume-profit analysis At Break Even Amount Sales Variable Expense Contribution Fixed Costs Factory Depreciation Office Rent Advertising Liability Insurance office Depreciaon office Salaries Total Fixed Cost Profit Per Unit 991,700 820,996.0 170,704 21.10 17.47 3.63 180500 (9,796.00) $ 3.84 (0.21) 94500 12000 20000 5000 1000 48000 $ How many bird feeders must be sold at the current cost and sales price level to earn a $10,000 profit. 49,986 bird feeders breaks even at current price and take 10,000 / 3.28 = 3049 add 49,986 get 53034 total bird feed How much the sales price would have to increase to earn a $10,000 profit at the same cost and sales volume level. Amount Sales Variable Expense Contribution Fixed Costs Factory Depreciation Office Rent Advertising Liability Insurance office Depreciaon office Salaries Total Fixed Cost Profit Per Unit 994,996.00 820,996.0 174,000.00 78000 12000 20000 5000 1000 48000 164000 10,000.00 21.17 ACTUAL Per Unit 47,000 991,700 $ 21.10 248,160 37,741 332,760 2,585 105,750 5.28 0.803 7.08 0.055 2.25 94,000 820,996 2.00 17.47 170,704 3.63 78,000 12,000 4,500 ### ### ### ### ### 180,500 1.66 0.26 0.10 (9,796) $ $ 3.63 0.172 49,697 units 1,048,609.58 $ $ $ 52,450.44 units 1,106,704.30 33,272 Units 698,713 Revenue 2,753 Units at Current Sales Price 0.21 New Contribution Margin 17.47 Current Variable Costs 17.68 New Sales Price -term planning? 52,450 units et 53034 total bird feeders must be sold to earn 10,000 in profit olume level. original sales 21.10 $ 16,728 351,288 SP needed 21.17 Increase 0.07 Sales Price would have to increase by $0.42 to earn a $10,000 profit Milestone Two, Part I Use Tables I through IV on the MDE Manufacturing Budget to complete your calculations. Refer to Exhibit 7-2 on page 253 of the text Budget Model AxA Units Sold (quantity) Revenues Variable Costs DM-Plastic DM-Cedar Direct Manuf. Labor Variable Manuf. Overhead Total Variable Costs Fixed Manufacturing Overhead Total Costs Gross Margin Actual 47,000 $991,700 37,741 248,160 332,760 2,585 621,246 94,500 715,746 275,954 - Flexible Budget Variance $4,700 Favorable/ Unfavorable Favorable 2,491 Unfavorable 36,660 Unfavorable 50,760 Unfavorable 235 Unfavorable 89,676 Unfavorable 500 Favorable 89,176 Unfavorable 84,476 Unfavorable From Flexible Budget Calculations Sheet AxB Flexible Budget 47,000 $987,000 35,250 211,500 282,000 2,820 531,570 95,000 626,570 360,430 BxB Sales Volume Variance $63,000 Favorable/ Unfavorable Static Budget 50,000 Unfavorable $1,050,000 2,250 Favorable 13,500 Favorable 18,000 Favorable 180 Favorable 33,930 Favorable - Favorable 33,930 Favorable 29,070 Unfavorable 37,500 225,000 300,000 3,000 565,500 95,000 660,500 389,500 Milestone Two, Part II Use the variance supporting calculation tab to complete your calculations. Direct Materials - Cedar Direct Materials - Plastic Direct Labor Variable Manufacturing Overhead Price Variance -22560 Unfavorable 1034 Favorable 5640 Favorable Spending Variance -235 Unfavorable Efficiency Variance -14100 Unfavorable -3525 Unfavorable -56400 Unfavorable Efficiency Variance 470 Favorable Revenues Variable Costs DM-Plastic DM-Cedar Direct Manuf. Labor Variable Manuf. Overhead Total Variable Manufacturing Costs Fixed Manufacturing Overhead Total Manufacturing Costs Gross Margin Budgeted Unit Amounts $ 21.00 $ $0.75 $4.50 6.00 0.06 $11.31 $1.90 $13.21 7.79 Actual Volume $991,700 37741 248160 332760 2585 621246 94500 715746 $275,954 Flexible Budget Amount $987,000 35,250 211,500 282,000 2,820 531,570 95,000 626,570 $360,430 Use Tables III and IV on the MDE Manufacturing Budget to complete your calculations. Development of Price and Efficiency Variances - Calculatio DM-Plastic DM-Cedar Actual Feet per Unit 1.1 3.2 Direct Manuf. Labor Actual Labor Cost per Hour $ 11.80 Actual Costs Incurred (Actual Input Qty. Actual Price) Actual Feet per Unit Actual Units Direct Material Plastic 47,000 $ Direct Material Cedar 47,000 $ Actual Units Direct Manufacturing Labor Actual Input Qty. Budgeted Actual Price per f 1.1 $ 37,741 $ 3.2 $ 248,160 $ 0.73 0.60 $ 332,760 $ 47,000 1,034 Favorable Price Variance 1.65 47,000 22,560 Unfavorable Price Variance Actual Hours per Unit Actual Cost per Hour 47,000 $ $ Actual Units 11.80 Actual Units 47,000 5,640 Favorable Price Variance Actual Input Qty. Budgeted Actual Costs Actual Costs Variable manufacturing overhead 47000 $ $ Actual Units 0.25 2,585 0.22 $ 47000 235 Unfavorable Spending Variance Efficiency Variances - Calculations Actual Feet Used 51,700 150,400 Actual Units 47,000 47,000 Actual Cost per Actual Cost Unit 37,741 $ 0.73 248,160 $ 1.65 Actual Labor Actual Labor Actual Labor Costs Hours Actual Units Hours per Unit $ 332,760 28,200 47,000 0.60 Flexible Budget (Budgeted Input Qty. Allowed for Actual Output Budgeted Price) Actual Input Qty. Budgeted Price Actual Feet per Budgeted Cost Unit per f $ $ 1.1 $ 38,775 $ 3.2 $ 225,600 $ Actual Hours per Unit $ $ 0.75 47,000 Budgeted Cost per f 0.75 $ 1 $ 35,250 3 $ 211,500 1.50 $ 3,525 Unfavorable Efficiency Variance 1.50 47,000 14,100 Efficiency Variance Budgeted Cost per Hour 0.60 $ 338,400 $ Budgeted Feet per Unit Actual Units 12.00 Actual Units Budgeted Hours Budgeted Cost per per Unit Hour 47,000 $ 56,400 Unfavorable Efficiency Variance 0.5 $ 282,000 12.00 Flexible Budget (Budgeted Input Qty. Allowed for Actual Output Budgeted Price) Actual Input Qty. Budgeted Price Actual Feet per Budgeted Cost Unit per Foot $ 0.25 $ 2,350 $ Actual Units 0.20 Budgeted Feet per Unit 47000 $ 470 Favorable Efficiency Variance Budgeted Cost per Foot 0.3 $ 2,820 0.20