PLEASE ASSIST ON HOW TO GO ABOUT THE MANAGERIAL ACCOUNTING REPORT. ASSIST IN ALL THE QUESTIONS.

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Acme Foods, Inc. Balance Sheet December 31, 2012 Assets Cash Accounts Receivable Inventory Property and Equipment Less: Accumulated Depreciation Total assets 569,875 687,500 320,000 4,400,000 (428,000) 3,972,000 5,549,375 Liabilities and Stockholders' Equity Liabilities Current Liabilities Accounts Payable Accrued Expenses Notes Payable - current Total Current Liabilities 315,000 225,000 385,000 925,000 Notes Payable - long term Total Liabilities Stockholders' Equity Capital Stock $1 par Retained Earnings Total Stockholders' Equity 2,315,000 3,240,000 2,000,000 309,375 2,309,375 Total Liabilities and Stockholders' Equity 5,549,375 Acme Foods, Inc. Income Statement For the Year ended December 31, 2012 Sales Cost of Goods Sold Materials Labor Overhead - variable Total Cost of Goods Sold 5,500,000 1,375,000 1,512,500 962,500 3,850,000 Gross Profit Operating Expenses Selling costs General and Administrative costs 1,650,000 687,500 343,750 1,031,250 Net Income 618,750 Additional Information Facts about Acme Foods, Inc. The company produces a variety of novelty food products sold in grocery and convenience stores. The items are produced in large batches, packaged and boxed. One unit consists of one large box, which holds a number of smaller packages. The company distributed profits in the form of cash dividends before the end of the year. Unit and Sales Information Total units sold in 2012 275,000 Cost of Goods Sold overhead Overhead - variable costs Overhead - fixed costs Total COGS overhead 618,750 343,750 962,500 Selling costs Selling - variable costs (commissions) Selling - fixed costs Total selling costs 137,500 550,000 687,500 General and Administrative costs G&A - variable costs G&A - fixed costs Total G&A costs 137,500 206,250 343,750 Equivalent Unit Information - June Beginning WIP: 1000 units Direct Materials 100 % complete, costs incurred $2000 Conversion Costs 20% complete, costs incured $720 Units started: 23,000 Direct Materials costs incurred $46,000 Conversion Costs costs incured $84,000 Ending WIP: 2000 units Direct Materials 100 % complete Conversion Costs 70% complete Variances Information - September Standard and Actual Units produced: 22,000 units Direct Materials Price Variance (DMPV) Direct Materials Quantity Variance (DMQV) Direct Labor Rate Variance (DLRV) Direct Labor Effeciency Variance (DLEV) Standard Costs Direct Materials Standard Quantity per unit: 2.00 Standard Price per unit: $2.50 Direct Labor Standard Quantity per unit: 1.00 Standard Rate per unit: $5.50 Actual Costs Direct Materials Actual quantity used: 49,500 units Actual cost: $48,400 Direct Labor Actual hours: 24,200 Actual labor costs: $119,900 Product Mix and Scarce Resources The company uses a single packaging machine to package all the products. There are two main product lines: A and B. The packaging machine runs nearly continuously for two shifts per day The Contribution Margin is $5.75 per unit for product line A. The Contribution Margin is $7.35 per unit for product line B The machine can package 75 units of Product line A per hour The machine can package 60 units of Product line B per hour Both product lines are popular and generally sell in equal quantities. Course\tProject Managerial Accounting Project COURSE OBJECTIVES Upon successful completion of this course, the student will be able to: 1. 2. 3. 4. Analyze the ways accounting is used by management for planning, control, and feedback Prepare budgets and operating reports for managers Explain cost accumulation and allocation methods and practices Assess business decisions using costvolumeprofit analysis and incremental analysis CASE DESCRIPTION Acme Foods, Inc. manufactures a variety of novelty food products sold in grocery and convenience stores. The process is somewhat labor intensive. Although the company is small, it is profitable and its stock trades on a public stock exchange. You were recently hired as a cost accountant and management has asked you to complete several standard procedures, as well as provide your analysis of some specific decisions they need to make. PROJECT INSTRUCTIONS Management has asked you to complete the following 10 actions listed below. Complete each assignment, referring to the financial statements and \"Additional Information\" spreadsheet included with these instructions. Some of the assignments are straightforward and others require several steps. Where indicated, be sure to include all information and complete all the steps required. If you are asked to complete a specific calculation, include the formula you used. Submit all your calculations and documents as a single report and in the order listed below. 1. Prepare a variable costing income statement Refer to the \"Additional Information\" spreadsheet for needed information. 2. Determine the breakeven point under the following assumptions and scenarios a) Breakeven in units and sales dollars for 2012. b) Breakeven in units and sales dollars to earn a target profit of $800,000. c) Breakeven in units and sales dollars to offset the cost of a piece of new machinery costing $500,000. d) Breakeven in units and sales dollars to earn a target profit of $800,000 and offset the cost of a piece of new machinery costing $500,000 Prepare a flexible budget assuming 200,000 units, 250,000 units and 300,000 units produced and sold. Prepare a departmental equivalent units report 3. 4. 2013. Any unauthorized reproduction or distribution of this material is prohibited without express written permission. Students are expected to maintain the integrity of the assignment by refraining from reproducing or posting the assignment or their completed work where it can be viewed by current or future students. Course\tProject Managerial Accounting Project Calculate the equivalent units and cost per equivalent unit for the month of June and present the information in a departmental equivalent units report. Refer to the \"Additional Information\" spreadsheet for needed information. 5. 6. 7. 8. 9. Calculate materials and labor variances Calculate total variance for materials and labor, as well as two material variances and two labor variances for the month of September. Refer to the \"Additional Information\" spreadsheet for needed information. Determine multiple driver overhead allocation using Activity Based Costing The company has used a standard overhead allocation in the past using a single cost driver. Management wants to determine if using multiple cost drivers will provide better information for decision making. Calculate overhead using Activity Based Costing with the following information: a) The fixed cost pool will be allocated based on total building area occupied of the departments as follows: production department 60%; selling department (holding and shipping) 30%; general and administrative 10%. b) The variable cost pool will be allocated based on number of labor hours per year. c) Management estimates a total of 275,000 labor hours in the coming year divided as follows: production department 192,500 hours; selling department 55,000 hours; general and administrative 27,500 hours. Use incremental analysis to make shortterm decisions Roadrunner Enterprises has approached Acme about a special order. Roadrunner wants Acme to purchase a batch of products with a custom label. Acme's normal selling price is $20 per unit. Roadrunner wants to purchase 20,000 units and is willing to pay $13.50 per unit. Acme would incur no additional costs. Additionally, since this is a special order there would be no sales commissions or general and administrative costs associated with the special order. Should Acme take this offer? Write a memo to advise management if they should accept or reject this special offer, or if they should make a counter offer. Cite your calculations showing whether or not this would be a financially beneficial agreement and any additional information used in making your decision. Analyze a product mix scenario and determine optimal product mix assuming a scarce resource Calculate the contribution margin per hour for each of Acme's product lines and write a memo to management discussing whether one product line should be favored over the other. Keep in mind when making your recommendation that management is willing to favor one product somewhat over the other by producing 60% of the more profitable product and 40% of the less profitable product. Using this ratio, calculate the total weighted average contribution margin assuming the packaging machine is used for 4,000 hours per year. Refer to the \"Additional Information\" spreadsheet for needed information. Analyze a longterm capital decision Management is considering purchasing an adapter for their main forming machine that would reduce waste and increase contribution margin by 5%. The adapter will cost $292,000. First, calculate the payback period to the nearest tenth of a year. There would be an initial payment of $50,000 and five annual payments of $48,400 made at the end of each year. The company's marginal borrowing rate is 7%. Management will accept the decision if the increase in contribution margin yields payback in four years or 2013. Any unauthorized reproduction or distribution of this material is prohibited without express written permission. Students are expected to maintain the integrity of the assignment by refraining from reproducing or posting the assignment or their completed work where it can be viewed by current or future students. Course\tProject Managerial Accounting Project less. (Disregard depreciation and income taxes.) Should management purchase this adapter? Write a memo to advise management if they should buy the adapter based on their criteria, citing your calculations. 10. Evaluate business performance using ratios and financial statement analysis Prepare a common size (vertical analysis) balance sheet and income statement using the 2012 financial statements. Remember, all sales and purchases are on credit and use yearend balances only for calculating ratios. Calculate the following ratios for Acme: a) Working capital b) Current ratio c) Debt ratio d) Return on total assets e) Accounts receivable turnover rate and days in accounts receivable f) Inventory turnover rate and days in average inventory g) Earnings per share h) Priceearnings ratio (Acme's current stock price is $1.40 per share) Once you've calculated the necessary ratios, write one page explaining your evaluation on the financial health of Acme. What do the ratios tell you about the company? PROJECT SUBMISSION 1. A title page is not required for project submissions. Because evaluators do not see student names when reviewing student work, it is important that students not include any personal identifiers in their project submissions. 2. Save your document as a PDF file. In Microsoft Word, you can use the Save As option to select PDF as your file format. 3. If your project requires a video, you should post the video to a free video hosting site like www.youtube.com, www.photobucket.com, or one of the other free webhosting websites. The following website maintains a list of video hosting sites; http://www.videohostings.com/. In the written materials that you submit as part of the assignment, you should include the title of the video and a link for the faculty member to use to grade your submission. 4. Upload the PDF file in your course. 5. Your assignment will not be returned to you so keep a copy for your files. 2013. Any unauthorized reproduction or distribution of this material is prohibited without express written permission. Students are expected to maintain the integrity of the assignment by refraining from reproducing or posting the assignment or their completed work where it can be viewed by current or future students