I have attached the solution for week 5, the full projectand I need help solving week 6?

I am struggling with parts of this and could use some help.

Thank you

Scenario

Management has reviewed your report and would like to see budget comparisons between continuing

operations with the existing plant or opening a new plant. After a review of operations and expenses

Management has provided the following information:

a) Opening new plant:

? Sales price remains at $25, estimate 55,000 basketballs sold based on additional

advertising.

? Use variable expenses calculated in Week 5, #5

? Do not estimate any Overhead variance

? Sales commissions are 5% of gross sales.

? Administrative salaries remain unchanged.

? Rent expense is eliminated because the new plant offers space for administration.

? Management has decided to increase the advertising budget by 20%.

? Depreciation on the new plant is $250,000, this is in addition to current depreciation on

selling and administrative equipment.

b) Keeping existing plant:

? Sales price is increased to $29, sales decline to 48,000 because of increase in price.

? Use variable expenses calculated in Part 3, #4

? Do not estimate any Overhead variance

? Sales commissions are 5% of gross sales.

? Administrative salaries, rent and advertising increase by 5% because of increase in

costs.

? Depreciation expense is $10,000 on selling and administrative equipment.

Requirements

1. MakeA budget comparing operating in the new plant versus continuing operations in the existing plant.

Bryant & Stratton College 1 Personal Education, Lifetime Success Since 1854 ACCT330 - Managerial Accounting Portfolio Project Directions and Rubric This Assessment is worth 25% of your grade Outcomes Completing this Assessment will help you to meet the following Course, Program and Institutional Outcomes: Course Outcomes Interpret costs and behavior concepts tied to the management planning and decision making process. Evaluate the outcomes of past financial operations to predict future decisions. Develop business decisions based on financial data. Evaluate an organization's strategies and recommend improvements to maximize the economic benefits to a firm. Prepare and present an analysis report for decision making using multimedia. Program Outcomes Record and report financial information using Generally Accepted Accounting Principles (GAAP). Solve technology challenges, maintain systems, analyze data, and communicate results using business related computer applications. Integrate theory, knowledge and technology to interpret financial and non-financial information to aid decision makers within the organization. Institutional Outcomes Information Literacy and Communication - Utilize appropriate current technology and resources to locate and evaluate information needed to accomplish a goal, and then communicate findings in visual, written and/or oral formats. Relational Learning - Transfer knowledge, skills and behaviors acquired through formal and informal learning and life experiences to new situations. Thinking Abilities - Employ strategies for reflection on learning and practice in order to adjust learning processes for continual improvement. Quantitative and Scientific Reasoning - Follow established methods of inquiry and mathematical reasoning to form conclusions and make decisions. Community and Career - Participate in social, learning, and professional communities for personal and career growth. Deadline Deliverable items for the Portfolio Project will be required at different points during the course. Details for each submission are included below. The timeline is as follows: Deadline Activity Due by the end of Week 2 at 11:59 pm, ET Essential Question Discussion Due by the end of Week 3 at 11:59 pm, ET Information Literacy & Research Component Due by the end of Week 5 at 11:59 pm, ET. Cost-Volume-Profit Analysis Due by the end of Week 6 at 11:59 pm, ET. Prepare a budget Due by the end of Week 7 at 11:59 pm, ET. Video presentation of analysis and recommendation to management & video reflection ACCT330 - Portfolio Project 2 Purpose of Assignment In selected courses, you will build or revise a portfolio. The portfolio is intended to be a place where you collect your work and achievement to showcase your intellectual growth while in college. By the time you complete your program of study, your portfolio will include a narrative, a professional marketing plan, a career map, job-seeking documents (resume, cover letter, references), evidence of program-specific knowledge and learning, and life-long learning competence. Once completed and graded, you will upload clean copies of these documents to your electronic portfolio for future use. Building the portfolio throughout your academic career will allow you to set goals, establish a plan for growth, and stay on course for graduation and life-long learning achievements. ACCT330 requires many assignments that are associated with the Portfolio Project: a discussion on course essential questions (W3), a job-costing problem (W4), a cost-volume-profit analysis (W5), preparing a budget (W6), a video presentation to management and a video reflection added to the end of this video (W7). Please see the chart above and check your Tracking Calendar for individual deadlines. The Portfolio Project Presentation will be due in Week 7. After successful completion of these assignments, you will have initial evidence for your portfolio of your ability to use metacognition (\"thinking about thinking\" to inform future decisions), as well as your ability to research and provide evidence to support your thoughts and ideas. As you progress through your program of study, you will produce more advanced evidence of your metacognitive skills for your portfolio. During job interviews, you will want to highlight how you used these Thinking Abilities (metacognition) throughout your program of study to support your ability to reflect on approaches you used to solve problems, and how reflection enhanced your approach to future problem-solving situations. This metacognitive thought is represented not only in the Essential Questions Discussion (W3), but also in the Portfolio Project Reflection Video portion (W7). During this course, you have learned many managerial accounting practices, now it is time to pull it all together. It is important for you to have an understanding of the accounting language and to be able to create accounting documents as well as analyze and evaluate the statements. Review the requirements for this assignment, and think about the question(s) you will have to answer to complete the assignment successfully. As you work through the project, formulating questions will help you clarify the assignment and move forward with greater confidence. Knowing that thinking before beginning any assignment can lead to greater success. Scenario You are the Certified Managerial Accountant (CMA) for Northwood Company. You have worked for the company for several years and your responsibilities include working with managers to analyze business decisions by allocating production costs to goods, and creating budgets and production forecasts . You also provide information to the external accountant for preparation of the financial statements. Your opinion is well respected and you have successfully worked with management on several big projects in the past. Northwood Company manufactures a single line of basketballs in a small plant. Management has been meeting on several ideas they are considering about expansion of the plant as well as your advice on which would be the best alternative for production. After you have prepared the journal entries and income statement for the current year, management has asked you to review the data related to the proposed scenarios and prepare a presentation for top management. ACCT330 - Portfolio Project 3 Project Requirements Week 2 - Essential Question Discussion: Now that you have had time to review the Portfolio Project directions, it is time to brainstorm how you will put your project together during this course. This discussion will center around you creating Essential Questions that strongly relate to the course and your process of completing your portfolio project. A. Choose two of the following questions to answer: Explain why management accountants need to understand their company's strategy. Discuss the major benefits to be gained from budgeting. Restate what it means to obtain a competitive advantage. Identify the role managerial accounting plays in helping to achieve this goal. Explain the importance of measuring gross profit. B. Create your own Essential Question that relates the Project to the workplace. You may want to consider your own sense of ethics and integrity as well as that of the organization where you work. Identify values that are important within the accounting profession and to that of your employer. You will receive both peer and instructor responses to your initial post. Week 3 - Information Literacy & Research Component Use the template provided to reflect on the scholarly resources you will be utilizing to complete the requirements of the Portfolio Project. Consider the following terms you read about as part of your Introduction to Information Literacy & Research course: Authority means \"to look critically at the author of the information, as well as the sponsor or owner of the specific resource, such as the publisher or owner of the Website\" (Wilson, pg. 117). Currency includes the \"timeliness of the information\" (pg. 126). Content includes evaluating \"for whom the material was written, purpose and scope of the information, objectivity of the information and its accuracy\" (pg. 129). Relevance is related to how you will use the article in your project. Once you have the template completed, save it to your desktop and then upload and submit your assignment. This item will be reviewed by your instructor with any necessary feedback given to support your project moving forward. Reference Wilson, G. (2012). 100% Information Literacy Success. 3rd ed. Cengage Learning. Week 5 -- Cost-Volume-Profit Analysis This week, review the information provided by management and analyze different production scenarios. Your instructor will provide any necessary feedback to support your project moving forward. ACCT330 - Portfolio Project 4 Scenario Management has been meeting about different scenarios they have considered to increase sales and improve profitability. They would like to see the results of these scenarios and have sat down with you, the CMA, to have you provide information to help with their decision. Requirements 1. Compute the CM ratio (round variable expenses to the nearest dollar) and break-even point in balls and the degree of operating leverage at the given sales levels. 2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $2 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what is the new CM ratio and break-even point in balls? 3. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income as last year? 4. The president feels that the company must raise the selling price of the basketballs if the variable expenses increase by $2. If Northwood Company wants to maintain the same CM ratio as the current year, what selling price per ball must it charge to cover the increased costs? (round to the nearest dollar) 5. The company is discussion the construction of a new, automated manufacturing plan. The new plant would slash variable expenses by 40% per ball, but it would cause fixed expenses per year to double. If the new plant is built, what is the company's new CM ratio and break-even point in balls? 6. Prepare a contribution format income statement and compute the degree of operating leverage with the assumption that the new plant is built in the next year and the company manufactures 50,000 balls. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers, thus variable expenses are $14 per ball, of which 56% is direct labor cost. Last year, the company sold 50,636 balls with the following results (rounded): Sales (50,636 balls) ........................................................................... $ 1, 265, 900 Variable Expenses ............................................................................. 708, 904 Contribution Margin ...................................................................... 557,000 Fixed Expenses .............................................................................. 310,000 Net operating income ................................................................... 247,000 Week 6 -- Prepare a Budget Your instructor will provide any necessary feedback to support your project moving forward. Scenario Management has reviewed your report and would like to see budget comparisons between continuing operations with the existing plant or opening a new plant. After a review of operations and expenses Management has provided the following information: a) Opening new plant: Sales price remains at $25, estimate 55,000 basketballs sold based on additional advertising. Use variable expenses calculated in Week 5, #5 Do not estimate any Overhead variance Sales commissions are 5% of gross sales. Administrative salaries remain unchanged. Rent expense is eliminated because the new plant offers space for administration. Management has decided to increase the advertising budget by 20%. ACCT330 - Portfolio Project Depreciation on the new plant is $250,000, this is in addition to current depreciation on selling and administrative equipment. b) Keeping existing plant: Sales price is increased to $29, sales decline to 48,000 because of increase in price. Use variable expenses calculated in Part 3, #4 Do not estimate any Overhead variance Sales commissions are 5% of gross sales. Administrative salaries, rent and advertising increase by 5% because of increase in costs. Depreciation expense is $10,000 on selling and administrative equipment. Requirements 1. Prepare a budget comparing operating in the new plant versus continuing operations in the existing plant. Week 7 - Video Presentation and Proposal of analysis and recommendation You will need to upload a video presentation and your Proposal/Report to the assignment area. Scenario Management would like you to make a recommendation to either continue operating in the existing plant or constructing a new plant. You will use the information you have gathered from the Cost-Volume-Profit Analysis and the budgets you prepared. There is no right or wrong answer, this is based on your analysis and understanding of the company. Management strategy over the next 5 years is to add additional product lines, the current plant would need to be remodeled but the new plant is large enough to be able to accomodate these plans if demand is there. Requirements Part I: 1. Prepare a video presentation to Northwood management incorporating your data and findings from this Portfolio Project, using YouTube. Submit the link for your instructor to view. You can view this video for easy instruction and tips: http://www.youtube.com/watch?v=Hlxqk0iHp5w 2. Submit a Proposal/Report in the form of a PowerPoint presentation (this should help to keep you on track with your video presentation). Please include the Cost-Volume-Profit Analysis from Wk. 5 and the Budget from Wk. 6. 3. This portion of the video presentation should be 3-5 minutes. Part II: 1. Once you have completed the video presentation of your recommendation to Northwood Management, you will take 2-3 minutes at the end of the video, to reflect and describe the overall deliverable components of the Portfolio Project and how it directly relates to 2 Bryant & Stratton Workplace Capabilities (in the chart below). Tolerance Interpersonal Skills Problem Solving Dependability Bryant & Stratton College Workplace Capabilities Communication Attitude Perseverance Enthusiasm Persuasion Productivity Informational Literacy Technological Literacy Financial Literacy 5 ACCT330 - Portfolio Project Grading Criteria: Student's voice should be clear and easy to understand. Video should be made in lighted conditions. Student should vary his/her tone of voice and use pauses effectively to place emphasis on important points. Student should provide additional insight in his/her own words. Student should not read verbatim from their notes. Student should avoid non-words (\"Um,\" \"Uh,\" \"You Know\") and practice using professional language. 6 CRITERIA ACCT 330 - Portfolio Project Grading Rubric Exceeds Expectations Meets Expectations Needs Improvement 60 - 40 points 1. Presentation meets time Video Presentation & Reflection requirement. (60 pts.) 2. The presentation is easy to follow Requirements: and understand. PART I: 3. Student's voice is clear, easy to Prepare a 3-5 minute understand, and confident. YouTube presentation 4. Tone of voice is varied and pauses of recommendation. are used to highlight main points and show excitement for the subject. PART II: 5. End of video 2-3 minute reflection At the end of the recommendation video, on 2 Workplace Capabilities is reflect on the entire included. Portfolio Project in 2-3 6. Submitted on time. minutes. Relate 2 Workplace Capabilities to what you learned in your Portfolio Project. 30 - 20 points Proposal / Report: 1. Proposal is 4-5 pages with both (30 pts.) Cost-Volume-Profit Analysis and Proposal/Report Budget attached or embedded. detailed in PowerPoint 2. Proposal is easy to follow and slides and spreadsheets. understand. Mechanics: (10 pts.) Instructor Comments: 10 - 9 points No major grammar, punctuation, or spelling errors. 39 - 20 points 1. Presentation meets time requirement. 2. The presentation is generally organized, or the student's ideas may not be clearly understood. 3. Two to five instances of non-word usage are noted. 4. Presentation may contain 1-2 errors. 5. One Workplace Capability is included. 6. Submitted on time. 19 - 10 points 1. Proposal is 2-3 pages and includes both Cost-Volume-Profit Analysis and Budget. 2. The student's ideas are not clear to follow. 8 - 6 points One major or two minor grammar, punctuation, or spelling errors. 19 - 0 points 1. Does no meet time requirement. 2. The presentation is disorganized and confusing. 3. The student is reading information verbatim. 4. There are more than 2 errors in the presentation. 5. Five or more instances of non-word usage are noted. 6. No Workplace capabilities are included in the video. 9 - 0 points 1. Proposal is 1 page and does not include both Cost-Volume-Profit Analysis and Budget. 2. The proposal is disorganized and confusing. 5 - 0 points Many errors; detracts from the meaning of the project significantly. Unclear or awkward sentences. Total Points: % Earned Contribution Income Statement for last Year (50636 Balls) Per ball Total Sales 25 12659 00 7.84 39698 6 6.16 31191 8 Total variable costs 14 70890 4 Contribution Margin 11 55700 0 Less: Variable Costs Direct Labor Other Variable exp. Less: Fixed Expenses 31000 0 Net Income 24700 0 At this sales levels 1. Contribution Margin Ratio Contribution/Sales= 11/25= 44 % Break-even point in balls Fixed costs/Contribution per ball = 310000/1 1= 28182 Balls Degree of operating leverage= Contribution/Operating Income= 557000/247000= 2.26 2. Variable expenses increase by $2 per ball & S.P./ ball remains constant at $25 Contribution Margin Ratio Contribution/Sales= (11-2)/25= 36% Break-even point in balls Fixed costs/Contribution per ball = 310000/(11-2)= 34444 Balls 3. No.of balls to be sold next year to earn the same net operating income as last year Net operating income as last year 247000 Add:Fixed Expenses to be covered 310000 Total Contribution to be earned 557000 New contribution per unit(25-16)= 9 So, no.of units to be sold= 557000/9= 61889 balls 4. To maintain the same CM ratio as the current year, S.P. / ball must be To maintain the 44% ,Sales must be 557000/Sales= 0.44 Total Sales value=557000/0.44= 1265909 No.of balls to be sold= 61889 So, Selling price/ball= 1265909/61889= 20.45 Or Alternatively, using per ball rates, 9/S.P.=0.44 S.P./ ball= 9/0.44= 20.45 5.Slash variable expenses by 40% per ball, & fixed expenses per year to double New Contribution Margin Ratio Contribution/Sales=( Sales-V.C)/Sales=(25-8.4)/25= Break-even point in balls Fixed costs/Contribution per (310000)*2/(25- 66. 4 ball = 8.4)= 37349 6.New plant -50000 balls Contribution Income Statement for next Year (50000 Balls) Per ball Total Sales 25 125000 0 Less: Variable Costs 8.4 420000 Contribution Margin 16.6 830000 Less: Fixed Expenses 620000 Net Income 210000 Degree of operating leverage= Contribution/Operating Income= 830000/210000 =3.95 Ball s