Question #5 please, can be handwritten or Microsoft Word thanks. Need to show work. Please see project details and Exhibit 7 attached thanks.

You are Cindy, completing the analysis and developing a final report to Alan, president of BBCC. The report should analyze BBCC's current cost allocations and give advice for the future. It should be formatted as a memo and include the following: 1. Revised 20X7 income statement (7 marks) a) Manufacturing overhead allocation (2 marks) BBCC has adopted a normal costing approach with manufacturing overhead costs allocated based on direct labour hours. However, the actual cost of product manufactured report in Exhibit 3 in the Project Details document appears to have included an allocation of actual manufacturing overhead based on a percentage of sales. Revise this report so the normal costing approach adopted by the company is properly reflected. b) Income statement results (5 marks) Prepare a revised 20X7 actual income statement (Exhibit 2) using the cost of goods manufactured in part (a) and adjusting for over- or underapplied overhead. It is the company's policy to write off any total over- or underapplied overhead to the total cost of goods sold rather than individual products during the period in which it is incurred. Comment on the change in gross margin overall, and for each product individually, as a result of the changes applied. The finished product beginning and ending inventory for all three products is as follows: The-Bar Alamonde Salt-Lick Beginning inventory $17,561 $10,702 $0 Ending inventory 18,292 10,497 2. Overview of 20X7 results (6 marks) Prepare an overview of the 20x7 results. Discuss any significant differences between the 20x7 budget and the actual figures (Exhibits 2 to 4). Base the analysis on the revised figures from requirement 1. Your analysis should include a discussion of the following: difference between actual and budgeted sales quantities for each product changes in unit selling price and effect on sales . . ii) Compare this to actual 20X7 sales of The-Bar. Your answer should include a brief discussion on the risk of loss including addressing the margin of safety. b) Consider that the current selling price of The-Bar ($1.50 per bar) can increase by 10% before sales will begin to drop off. What effect will this increase in price have on break-even sales? Discuss any significant differences. NOTE: The dashboard is interactive. Step 7 in the Appendix creates a slider that will allow you to change the total sales dollars per case. Move the slider to a point where the total selling price of a case $1.65 (or $1.50 plus 10%) displays and answer the above question. c) In reference to part a), assume BBCC has decided to only use product costs for their breakeven analysis. Use the interactivity of the dashboard as explained in Task 4 in the Appendix to display only product costs. NOTE: Clicking on the Product Costs section of either of the pie charts will make the following changes: All period costs on the bar chart become shaded. The break-even point in units will be recalculated without the period costs. This interactivity will help you answer this question. d) Identify any concerns you have with the quality of the data being used in this analysis. . NOTE: Insert into your project a screenshot of the completed dashboard, illustrating the break-even point in units at a selling price of $6,000 ($1.50 per bar). Additionally, use screenshots of the dashboard to reinforce your discussion. While the dashboard must consist of all elements displayed, your placement of the visualizations can be arranged differently. 5. Cocoa bean processing division options (8 marks) a) (4 marks) Based on the information provided by the cocoa bean processing division manager from Exhibit 7, assess the total gross profits and total gross margin percentage of each of the following options (include total joint costs in your calculation, but do not allocate the joint costs to individual products): i) Current sales of cocoa butter and cocoa cakes ii) Proposed sales of cocoa butter and canned, powdered baking cocoa iii) Proposed sales of chocolate liquor Comment on which of the three options is most desirable for the company to pursue and why (consider other non-financial concerns that should also be taken into consideration). b) (4 marks) Allocate joint costs using the following options and methods: i) Based on the current sales of cocoa butter and cocoa cakes, use the sales value at split-off method. ii) Based on the proposed sales of cocoa butter and canned, powdered baking cocoa, use the net realizable method. Note on rounding: Use unrounded numbers for all calculations and round the final answer to the nearest dollar. 7 PROJECT DETAILS Since the first candy bar was made in Great Britain by Joseph Fry in 1847, companies have continued to perfect the quality of this decadent treat. The Boston Bar Chocolate Company (BBCC) is no exception. BBCC began operations 10 years ago by two brothers, Alan and Calvin, who had a passion for chocolate and a vision for creating a treat that was both tasty and healthy. is vision. The company's slogan is "Raising THE-BAR on health," and for good reason. Customers keep coming back for more, not only because of The-Bar's great taste, but also because of the growing number of health reports stating that the flavanols in chocolate help to reduce blood pressure and increase memory retention. BBCC roasts its own cocoa beans to ensure maximum flavanol content. This gives BBCC a competitive advantage in the premium-quality chocolate market. The two brothers continue to own a majority of the shares and are actively involved in the company - Alan as president and Calvin as marketing manager. Divisions and processes BBCC's processing plant consists of two divisions: the cocoa bean division and the chocolate bar division. The cocoa bean division purchases the raw cocoa beans and ferments and roasts them. The products and byproducts that cannot be used in the chocolate bar division are packaged and sold to customers for a variety of other final products. The chocolate bar division produces the wrapped chocolate bars that are sold to retailers. All products follow the same mixing procedure and some products have an additional step of adding particulates such as almonds or salt granules. The mixture is then poured into moulds, cooled, separated into bars, and wrapped. While most of the resources in the two divisions are separate, the divisions operate on the same premises. Chocolate bar division The chocolate bar division currently produces 1.6 million chocolate bars per year. This represents around 80% of its practical capacity. Practical capacity is 12,000 direct labour hours or about 2 million bars per year. In addition to The-Bar, the chocolate bar division also produces a version of The-Bar with almonds called Alamonde and another with pieces of pink Himalayan salt called Salt-Lick. Most national grocery chains carry The-Bar and Alamonde. In addition, health-food stores carry Salt-Lick as a health booster because the Himalayan pink salt is said to detoxify the body by balancing pH. Because Salt-Lick is fairly new, it is produced as a special order and no inventory is kept on hand. It takes about the same amount of effort and resources to produce The-Bar as it does to produce Alamonde. As such, a process costing system is used. The batches are processed in a similar manner and receive the same amount of direct labour costs, basic ingredients, and manufacturing overhead costs. Therefore, these costs are averaged over all batches. The production process involves several operations in which conversion costs and ingredients are added to manufacture the product. Ingredients are added at the beginning of each operation. Direct labour costs and overhead are added evenly throughout the process based on direct labour hours. While the Salt-Lick bar is also processed in batches, it is special ordered, and production runs are scheduled based on demand. As a result, costs are assigned to a distinct batch using a job costing system. Current situation Alan has not been complacent about the success of the company. He continually monitors progress and scrutinizes costs. While candy bar consumption has fallen, the overall consumption of chocolate per capita in the market is stable, and the company has been able to maintain its market share due to continued consumer demand for healthy chocolate products. However, Alan would like to ensure that the company is adequately controlling costs and reducing risk. As such, he would also like to make some pricing predictions on his products. Recently, Alan engaged Cindy, CPA, to review the latest operating statements. He anticipates that Cindy will be able to provide some insight into how to be proactive in addressing some of the issues. The following exhibits provide more details on these issues along with details about the budgeted and actual financial position of the company. This information will be used to complete the requirements of Project 1 and Project 2 Note: To reduce complexity in the case study, process costing is used. A batch system like candy bar production would normally use an operational costing system, which is a hybrid of process and job costing Exhibit 7 Cocoa bean processing division options The cocoa bean processing division receives unprocessed beans and processes them. A portion of the output comes to the chocolate bar division at the cocoa bean process division's cost plus a small profit. The cocoa bean processing division is able to satisfy both the external and internal demand for its products. The manager of the bean processing division has asked that an analysis be done on the best way to process and package products given the following information. Additional information on cocoa bean processing The job in the cocoa bean processing division is to process raw cocoa beans through fermentation and roasting, and processing the chocolate nibs into chocolate liquor, cocoa butter, and cocoa cakes. The cocoa cakes are what is left of the chocolate liquor after the cocoa butter is removed. The original purpose was to process the beans for the chocolate bar division; however, there is enough capacity to process more beans and sell the intermediate products to outside customers. The questions are the profitability of the products currently being sold to outside customers and the opportunities for a new product. Currently, the chocolate liquor, which is the first saleable product in the bean processing division is processed further into cocoa butter and cocoa cakes. The cocoa butter is sold to a plant that processes it for skin cream and the cocoa cakes are packaged in bulk and sold to other manufacturers to include in baking products. One option to consider is to grind the cocoa cakes into powder and package the final product into cans to be sold to retail grocery stores as baking chocolate. However, there is also a market for chocolate liquor An illustration including the proposed process follows. The company needs advice on the following: 1. Is it profitable to process cocoa cakes further into a powder, package it in cans, and sell it as baking cocoa? 2. Is it still profitable to process chocolate liquor into cocoa cakes and cocoa butter? 3. Using the most profitable method of processing cocoa beans, how should the joint cost be allocated? Illustration of cocoa bean processing and opportunities Procedure cocoa bean processing division Cocos cakes Sales va Grinding and packaging (Cost: 54.500) Cained baking COCOB Sales $28.000 $150 Raw Cacao beans $10,000 Roasting and refining process (Cost: 6.500 Chocolate quor les value: $64.000 Pressing and drying (Cost: 53.800) Cocoa butter Sales value $31.00 Sales opportunity Processing and sales opportunity The illustration is based on the following data: Unprocessed cocoa beans - price per 5,000 kg $10,000 Roasting and refining costs - resulting in chocolate liquor $6,500 Yield of chocolate liquor 80% Selling price of chocolate liquor per kilogram $13.50 Cost of processing liquor into cocoa butter and cakes $3,800 Yield of cocoa butter 55% Yield of cocoa cakes 45% Sales value of cocoa butter per kilogram $14.50 Sales value of cocoa cakes per kilogram $9.75 Cost of grinding cocoa cakes into powder and packaging $6,500 Yield of cans of powdered baking cocoa 6,800 Selling price per can of powdered baking cocoa $4.25 The final issue is the increasing cost of cocoa for production. Because of rising temperatures in cocoa-producing countries, it is predicted that many of Africa's cocoa- production areas will be too hot to grow cocoa crops in the near future. Some farmers are already replacing their cocoa crops with palm oil or rubber. This will put upwards pressure on the price of cocoa if there are fewer suppliers. You are Cindy, completing the analysis and developing a final report to Alan, president of BBCC. The report should analyze BBCC's current cost allocations and give advice for the future. It should be formatted as a memo and include the following: 1. Revised 20X7 income statement (7 marks) a) Manufacturing overhead allocation (2 marks) BBCC has adopted a normal costing approach with manufacturing overhead costs allocated based on direct labour hours. However, the actual cost of product manufactured report in Exhibit 3 in the Project Details document appears to have included an allocation of actual manufacturing overhead based on a percentage of sales. Revise this report so the normal costing approach adopted by the company is properly reflected. b) Income statement results (5 marks) Prepare a revised 20X7 actual income statement (Exhibit 2) using the cost of goods manufactured in part (a) and adjusting for over- or underapplied overhead. It is the company's policy to write off any total over- or underapplied overhead to the total cost of goods sold rather than individual products during the period in which it is incurred. Comment on the change in gross margin overall, and for each product individually, as a result of the changes applied. The finished product beginning and ending inventory for all three products is as follows: The-Bar Alamonde Salt-Lick Beginning inventory $17,561 $10,702 $0 Ending inventory 18,292 10,497 2. Overview of 20X7 results (6 marks) Prepare an overview of the 20x7 results. Discuss any significant differences between the 20x7 budget and the actual figures (Exhibits 2 to 4). Base the analysis on the revised figures from requirement 1. Your analysis should include a discussion of the following: difference between actual and budgeted sales quantities for each product changes in unit selling price and effect on sales . . ii) Compare this to actual 20X7 sales of The-Bar. Your answer should include a brief discussion on the risk of loss including addressing the margin of safety. b) Consider that the current selling price of The-Bar ($1.50 per bar) can increase by 10% before sales will begin to drop off. What effect will this increase in price have on break-even sales? Discuss any significant differences. NOTE: The dashboard is interactive. Step 7 in the Appendix creates a slider that will allow you to change the total sales dollars per case. Move the slider to a point where the total selling price of a case $1.65 (or $1.50 plus 10%) displays and answer the above question. c) In reference to part a), assume BBCC has decided to only use product costs for their breakeven analysis. Use the interactivity of the dashboard as explained in Task 4 in the Appendix to display only product costs. NOTE: Clicking on the Product Costs section of either of the pie charts will make the following changes: All period costs on the bar chart become shaded. The break-even point in units will be recalculated without the period costs. This interactivity will help you answer this question. d) Identify any concerns you have with the quality of the data being used in this analysis. . NOTE: Insert into your project a screenshot of the completed dashboard, illustrating the break-even point in units at a selling price of $6,000 ($1.50 per bar). Additionally, use screenshots of the dashboard to reinforce your discussion. While the dashboard must consist of all elements displayed, your placement of the visualizations can be arranged differently. 5. Cocoa bean processing division options (8 marks) a) (4 marks) Based on the information provided by the cocoa bean processing division manager from Exhibit 7, assess the total gross profits and total gross margin percentage of each of the following options (include total joint costs in your calculation, but do not allocate the joint costs to individual products): i) Current sales of cocoa butter and cocoa cakes ii) Proposed sales of cocoa butter and canned, powdered baking cocoa iii) Proposed sales of chocolate liquor Comment on which of the three options is most desirable for the company to pursue and why (consider other non-financial concerns that should also be taken into consideration). b) (4 marks) Allocate joint costs using the following options and methods: i) Based on the current sales of cocoa butter and cocoa cakes, use the sales value at split-off method. ii) Based on the proposed sales of cocoa butter and canned, powdered baking cocoa, use the net realizable method. Note on rounding: Use unrounded numbers for all calculations and round the final answer to the nearest dollar. 7 PROJECT DETAILS Since the first candy bar was made in Great Britain by Joseph Fry in 1847, companies have continued to perfect the quality of this decadent treat. The Boston Bar Chocolate Company (BBCC) is no exception. BBCC began operations 10 years ago by two brothers, Alan and Calvin, who had a passion for chocolate and a vision for creating a treat that was both tasty and healthy. is vision. The company's slogan is "Raising THE-BAR on health," and for good reason. Customers keep coming back for more, not only because of The-Bar's great taste, but also because of the growing number of health reports stating that the flavanols in chocolate help to reduce blood pressure and increase memory retention. BBCC roasts its own cocoa beans to ensure maximum flavanol content. This gives BBCC a competitive advantage in the premium-quality chocolate market. The two brothers continue to own a majority of the shares and are actively involved in the company - Alan as president and Calvin as marketing manager. Divisions and processes BBCC's processing plant consists of two divisions: the cocoa bean division and the chocolate bar division. The cocoa bean division purchases the raw cocoa beans and ferments and roasts them. The products and byproducts that cannot be used in the chocolate bar division are packaged and sold to customers for a variety of other final products. The chocolate bar division produces the wrapped chocolate bars that are sold to retailers. All products follow the same mixing procedure and some products have an additional step of adding particulates such as almonds or salt granules. The mixture is then poured into moulds, cooled, separated into bars, and wrapped. While most of the resources in the two divisions are separate, the divisions operate on the same premises. Chocolate bar division The chocolate bar division currently produces 1.6 million chocolate bars per year. This represents around 80% of its practical capacity. Practical capacity is 12,000 direct labour hours or about 2 million bars per year. In addition to The-Bar, the chocolate bar division also produces a version of The-Bar with almonds called Alamonde and another with pieces of pink Himalayan salt called Salt-Lick. Most national grocery chains carry The-Bar and Alamonde. In addition, health-food stores carry Salt-Lick as a health booster because the Himalayan pink salt is said to detoxify the body by balancing pH. Because Salt-Lick is fairly new, it is produced as a special order and no inventory is kept on hand. It takes about the same amount of effort and resources to produce The-Bar as it does to produce Alamonde. As such, a process costing system is used. The batches are processed in a similar manner and receive the same amount of direct labour costs, basic ingredients, and manufacturing overhead costs. Therefore, these costs are averaged over all batches. The production process involves several operations in which conversion costs and ingredients are added to manufacture the product. Ingredients are added at the beginning of each operation. Direct labour costs and overhead are added evenly throughout the process based on direct labour hours. While the Salt-Lick bar is also processed in batches, it is special ordered, and production runs are scheduled based on demand. As a result, costs are assigned to a distinct batch using a job costing system. Current situation Alan has not been complacent about the success of the company. He continually monitors progress and scrutinizes costs. While candy bar consumption has fallen, the overall consumption of chocolate per capita in the market is stable, and the company has been able to maintain its market share due to continued consumer demand for healthy chocolate products. However, Alan would like to ensure that the company is adequately controlling costs and reducing risk. As such, he would also like to make some pricing predictions on his products. Recently, Alan engaged Cindy, CPA, to review the latest operating statements. He anticipates that Cindy will be able to provide some insight into how to be proactive in addressing some of the issues. The following exhibits provide more details on these issues along with details about the budgeted and actual financial position of the company. This information will be used to complete the requirements of Project 1 and Project 2 Note: To reduce complexity in the case study, process costing is used. A batch system like candy bar production would normally use an operational costing system, which is a hybrid of process and job costing Exhibit 7 Cocoa bean processing division options The cocoa bean processing division receives unprocessed beans and processes them. A portion of the output comes to the chocolate bar division at the cocoa bean process division's cost plus a small profit. The cocoa bean processing division is able to satisfy both the external and internal demand for its products. The manager of the bean processing division has asked that an analysis be done on the best way to process and package products given the following information. Additional information on cocoa bean processing The job in the cocoa bean processing division is to process raw cocoa beans through fermentation and roasting, and processing the chocolate nibs into chocolate liquor, cocoa butter, and cocoa cakes. The cocoa cakes are what is left of the chocolate liquor after the cocoa butter is removed. The original purpose was to process the beans for the chocolate bar division; however, there is enough capacity to process more beans and sell the intermediate products to outside customers. The questions are the profitability of the products currently being sold to outside customers and the opportunities for a new product. Currently, the chocolate liquor, which is the first saleable product in the bean processing division is processed further into cocoa butter and cocoa cakes. The cocoa butter is sold to a plant that processes it for skin cream and the cocoa cakes are packaged in bulk and sold to other manufacturers to include in baking products. One option to consider is to grind the cocoa cakes into powder and package the final product into cans to be sold to retail grocery stores as baking chocolate. However, there is also a market for chocolate liquor An illustration including the proposed process follows. The company needs advice on the following: 1. Is it profitable to process cocoa cakes further into a powder, package it in cans, and sell it as baking cocoa? 2. Is it still profitable to process chocolate liquor into cocoa cakes and cocoa butter? 3. Using the most profitable method of processing cocoa beans, how should the joint cost be allocated? Illustration of cocoa bean processing and opportunities Procedure cocoa bean processing division Cocos cakes Sales va Grinding and packaging (Cost: 54.500) Cained baking COCOB Sales $28.000 $150 Raw Cacao beans $10,000 Roasting and refining process (Cost: 6.500 Chocolate quor les value: $64.000 Pressing and drying (Cost: 53.800) Cocoa butter Sales value $31.00 Sales opportunity Processing and sales opportunity The illustration is based on the following data: Unprocessed cocoa beans - price per 5,000 kg $10,000 Roasting and refining costs - resulting in chocolate liquor $6,500 Yield of chocolate liquor 80% Selling price of chocolate liquor per kilogram $13.50 Cost of processing liquor into cocoa butter and cakes $3,800 Yield of cocoa butter 55% Yield of cocoa cakes 45% Sales value of cocoa butter per kilogram $14.50 Sales value of cocoa cakes per kilogram $9.75 Cost of grinding cocoa cakes into powder and packaging $6,500 Yield of cans of powdered baking cocoa 6,800 Selling price per can of powdered baking cocoa $4.25 The final issue is the increasing cost of cocoa for production. Because of rising temperatures in cocoa-producing countries, it is predicted that many of Africa's cocoa- production areas will be too hot to grow cocoa crops in the near future. Some farmers are already replacing their cocoa crops with palm oil or rubber. This will put upwards pressure on the price of cocoa if there are fewer suppliers