In this project, you will be taking what you have learned so far in the course and creating a new company to apply it all to. Please make sure you complete the steps in order, and let me know if you have any questions along the way. All answers should be done in Excel, and be sure to show your work.

A.Create a new manufacturing company and answer the following questions:

1.What is your new company's name?

2.What is your company's main product that it manufactures?

3.Who are your company's main customers?

4.What are the raw materials that are used to make your main product? List at least 5.

5.What other operating expenses (period costs) does your company have? List at least 10.

B.Regarding your main product, answer the following questions regarding Sales Revenue:

1. What is the selling price per Unit of your main product? Make sure it's high enough to be generate a profit, but still reasonable so your customers wil be able to afford it.
2. How many units does your company expect to sell in each of the first 3 months? January ____ Units

February ____units

March ______ units

3. Based on the unit selling price & # of units you expect to sell, what is the total budgeted sales revenue you expect to receive each month?

January _____ sales revenue

February_____sales revenue

March_______sales revenue

C.Regarding your main product, answer the following questions regarding Production Costs:

1.What are the 3 components of any product's cost?

2. How many pounds of material does it take to make one unit, and what is the cost per pound?

a. Therefore what is the total cost of the Raw Materials needed to make one unit?

3. How many hours does it take to make one unit, and what is the direct labor rate per hour?

a. Therefore what is the total cost of the Direct Labor needed to make one unit?

4.How many machine hours (MOH) does it take to make one unit, and what is the cost per machine hour?

a.) Therefore what is the total cost of the MOH needed to make one unit?

5. What therefore is the total production cost to make one unit? (RM + DL + MOH)

D.Since your company is brand new, you have no beginning inventories at all. Therefore you will need to produce (at least) the number of products you intend to sell. This means your production budget for the first 3 months will equal your budgeted number of units to sell in #B2.

1. Your production budget therefore should be:

January____units

February____Units

March____units

2. Using the production cost per unit from #C5 and the production budget you just made, what is the total budgeted production cost (COGS) for each of the first 3 months?

January_____COGS

February_____COGS

March_____ COGS

E.Sales Revenue less Cost of Goods Sold (COGS) = Gross Margin. Calculate your Budgeted Gross Margin and Budgeted Gross Margin Ratio for each of the first 3 months:

1.Gross Margin:

January

February

March

2.Gross Margin Ratio:

January

February

March

F.Regarding the Operating Expenses you mentioned in problem #A4, what are the total of these Budgeted Operating Expenses (period costs) for each month:

Operating Expenses:

January

February

March

G.Gross Margin less Operating Expenses = Operating Income. Calculate your Budgeted Operating Income for each of the first 3 months:

1. Operating Income:

January

February

March

H.Using the information you have budgeted so far, prepare a Budgeted Income Statement for each of the first 3 months, as well as for the Quarter Ending March 31st (3 months combined).

1.Budgeted Income Statement for January

2.Budgeted Income Statement for February 13.

3.Budgeted Income Statement for March

4.Budgeted Income Statement for QUarter Ending 3/31/2020

I.You have listed many different expenses for your company. For each of the expenses, list whether they are 1) variable, fixed, or mixed, 2) product or period, and 3) direct or indirect

Raw Materials

Direct Labor

Manufacturing Overhead

The 10 Operating Expenses you listed in # A5

J.Your company's product is quite popular, and the customer demand is increasing quickly. You want to predict (budget) various scenarios going forward of what your total costs would be at varied levels of production activity. The best way to do that is to calculate a cost formula.

1. Add up all of your expenses for the first quarter (COGS and operating expenses combined).
2. Assume that 60% of your total exenses are variable, and 40% of your total expenses are fixed . What is the total of your fixed expenses for the first quarter ? What is the total of your variable expenses for the first quarter?

3. Divide your total variable expenses by the total # of units produced in #D1. This will give you your variable cost per unit.

1. Using your total fixed costs in #2.a) above and variable costs per unit in #3 above, calculate your Cost Formula for your company.
2. Using the Cost Formula, calculate total budget costs (Y) using 5 different production levels of activity (X) that are increases to what you produced in the first quarter.