I have a case assignment to do in Cost accounting and the assignment reads: For this assignment, prepare a professional chart (using Excel) identifying the similarities and differences between the two cases. Choose one of the cases and write a 1-3 page paper answering the question What would management need with this specific information requested in the case? Write the paper from the perspective of a manager who is reporting to the board of directors.

Could you advise on how to prepare a professional chart using the two cases I have described below ( I have already worked on the case assignments I just need advice on how to prepare a professional chart identifying the similarities and differences between the two and advice on writing the paper?

Case 1

Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customersfood from the restaurant segment and freshly brewed beer from the beer production segment. Both segments are typically in the same building, which allows customers to see the beer-brewing process.

After months of research, the owners created a financial model that showed the following projections for the first year of operations.

Sales
Beer sales	$	815,900
Food sales		955,200
Other sales		218,900
Total sales	$	1,990,000
Less cost of sales		503,868
Gross margin	$	1,486,132
Less marketing and administrative expenses		1,129,800
Operating profit	$	356,332

In the process of pursuing capital through private investors and financial institutions, RBC was approached with several questions. The following represents a sample of the more common questions asked:

• What is the break-even point?
• What sales dollars will be required to make $100,000? To make $570,000?
• Is the product mix reasonable? (Beer tends to have a higher contribution margin ratio than food, and therefore product mix assumptions are critical to profit projections.)
• What happens to operating profit if the product mix shifts?
• How will changes in price affect operating profit?
• How much does a pint of beer cost to produce?

It became clear to the owners of RBC that the initial financial model was not adequate for answering these types of questions. After further research, RBC created another financial model that provided the following information for the first year of operations.

Sales
Beer sales (41% of total sales)	$	815,900
Food sales (48% of total sales)		955,200
Other sales (11% of total sales)		218,900
Total sales				$	1,990,000
Variable Costs
Beer (13% of beer sales)	$	106,067
Food (35% of food sales)		334,320
Other (29% of other sales)		63,481
Wages of employees (25% of sales)		497,500
Supplies (2% of sales)		39,800
Utilities (4% of sales)		79,600
Other: credit card, misc. (1% of sales)		19,900
Total variable costs				$	1,140,668
Contribution margin				$	849,332
Fixed Costs
Salaries: manager, chef, brewer	$	138,000
Maintenance		29,000
Advertising		14,000
Other: cleaning, menus, misc		40,000
Insurance and accounting		34,000
Property taxes		18,000
Depreciation		89,000
Debt service (interest on debt)		131,000
Total fixed costs				$	493,000
Operating profit				$	356,332

Required:

Perform a sensitivity analysis by answering the following questions:

a. What is the break-even point in sales dollars for RBC?

b. What is the margin of safety for RBC?

c. What sales dollars would be required to achieve an operating profit of $100,000? $570,000?

Case 2

I dont understand this. Last year [year 1], we decided to drop our highest-end Red model and only produce the Yellow and Green models, because the cost system indicated we were losing money on Red. Now, looking at the preliminary numbers, our profit is actually lower than last year and it looks like Yellow has become a money loser, even though our prices, volumes, and direct costs are the same. Can someone please explain this to me and maybe help me decide what to do next year?

Robert Dolan

President & CEO

Dolan Products

Dolan Products is a small, family-owned audio component manufacturer. Several years ago, the company decided to concentrate on only three models, which were sold under many brand names to electronic retailers and mass-market discount stores. For internal purposes, the company uses the product names Red, Yellow, and Green to refer to the three components.

Data on the three models and selected costs follow.

Year 1	Red			Yellow			Green			Total
Units produced and sold	9,000			13,000			20,000			42,000
Sales price per unit	$	105		$	90		$	55
Direct materials cost per unit	$	45		$	35		$	20
Direct labor-hours per unit		3			2			0.5
Wage rate per hour	$	9		$	9		$	9
Total manufacturing overhead										$882,000

This year (year 2), the company only produced the Yellow and Green models. Total overhead was $720,000. All other volumes, unit prices, costs, and direct labor usage were the same as in year 1. The product cost system at Dolan Products allocates manufacturing overhead based on direct labor-hours.

Required:

a. Compute the product costs and gross margins (revenue less cost of goods sold) for the three products and total gross profit (loss) for year 1.

b. Compute the product costs and gross margins (revenue less cost of goods sold) for the two remaining products and total gross profit (loss) for year 2.

c. Should Dolan Products drop Yellow for year 3?