Stocking Stuff, Inc. purchases raw materials $($stockings and candy$)$ and converts those to finished goods $($stuffed

stockings$).$ The company uses a Just$-$In$-$Time inventory management system for work$-$in$-$process and finished goods, so

the only inventory on hand at the end of each month is raw materials. Management has given you the following data and

instructions:

DATA

on hand, BOM purchased on hand, EOM

Stockings #REF! each $100-2080$

Candy $($prepackaged$)$ #REF! each $100-3070$

Labor per piece stuffed #REF! each

Sales Salary #REF! per month

Commission #REF! each

Internet and web site #REF! per month modifiable data $-$ from answer key

Production facility rent #REF! per month calculated

Sales Price #REF! each student entry

Target Profit #REF! per month

Tax Rate #REF!

Expected unit for sensitivity analysis #REF!

Instructions:

$1.$ Calculate the variable cost per unit

$2.$ Calculate total fixed costs

$3.$ Calculate the contribution margin per unit

$3$a$.$ Calculate the contribution margin ratio

$4.$ Calculate the break even point in units

$5.$ Calculate the number of units needed to hit the target profit

$6.$ Create a contribution margin statement for the target profit

$7.$ Based on the target profit, calculate raw materials inventory at cost

a$.$ beginning

b$.$ purchases

c$.$ ending

$8.$ Based on the target profit, prepare an income statement using full absorption costing

$9.$ Calculate the unit cost for cost of goods sold under full absorption costing

$10.$ Calculate margin of safety at target profit

a$.$ in dollars

b$.$ in units

c$.$ as a percentage

$11.$ Calculate operating leverage at target profit

$12.$ How will profit change if sales price changes by $5\%$ increase

a$.$ in dollars

b$.$ percentage

$13.$ How will profit change if sales volume changes by $-20\%$ decrease

a$.$ in dollars

b$.$ percentage

$14.$ How will profit change if fixed costs change by $-7\%$ decrease

and variable cost change by $10\%$ increase

a$.$ in dollars

b$.$ percentage

VARIABLE COSTING

Variable costs per unit $1$

Total fixed costs $2$

Stocking Stuff, Inc. $6$

CVP Analysis $-$ break even

For the month ending December $31,20$XX

Units $$/$unit Total

Sales $4,5$ round units to whole number

Variable costs

Contribution Margin

Fixed costs

Operating income

CM ratio $3$

Stocking Stuff, Inc. $6$

CVP Analysis $-$ target profit

For the month ending December $31,20$XX

Units $$/$unit Total

Sales

Variable costs

Contribution Margin

Fixed costs

Operating income

CM ratio $3$

FULL ABSORPTION COSTING

CVP Analysis $-$ target profit on hand, BOM purchased on hand, EOM

Stockings

Candy $($prepackaged$)$

Total

$7$a $7$b $7$c

Stocking Stuff, Inc. $8$

Income Statement

For the month ending December $31,20$XX

Sales $ $-$

Cost of Goods Sold

Beginning raw materials

Raw materials purchased

Ending raw materials

Raw materials transferred to WIP

Beginning WIP $ $-$

Direct Labor

Manufacturing overhead $ $2,400\mathrm{.}00$

Ending WIP $ $-$

WIP transferred to finished goods

Beginning finished goods $ $-$

Goods available for sale

Ending finished goods $ $-$

Cost of Goods Sold

Gross Profit

Selling, general, and administrative costs

Sales Salaries

Commissions

Internet expenses

Total selling, general, and administrative costs

Operating income

Provision for income taxes

Per unit cost, full absorption $9$

Stocking Stuff, Inc.

Sensitivity Analysis $-$ Base Case

For the month ending December $31,20$XX

Units $$/$unit Total

Sales

Variable costs

Contribution Margin

Fixed costs

Operating income

CM ratio

Stocking Stuff, Inc.

Sensitivity Analysis $-$ Scenario $1$

For the month ending December $31,20$XX

Units $$/$unit Total

Sales

Variable costs

Contribution Margin

Fixed costs

Operating income

Increase $($decrease$)$ over base

$\%$ increase $($decrease$)$ over base

CM ratio

Stocking Stuff, Inc.

Sensitivity Analysis $-$ Scenario $2$

For the month ending December $31,20$XX

Units $$/$unit Total

Sales

Variable costs

Contribution Margin

Fixed costs

Operating income

Increase $($decrease$)$ over base

$\%$ increase $($decrease$)$ over base

CM ratio

Stocking Stuff, Inc.

Sensitivity Analysis $-$ Scenario $3$

For the month ending December $31,20$XX

Units $$/$unit Total

Sales

Variable costs

Contribution Margin

Fixed costs

Operating income

Increase $($decrease$)$ over base

$\%$ increase $($decrease$)$ over base