The purpose of this project is to help you integrate the managerial accounting concepts we cover in class and apply them to a real-world business setting. This project contains three phases. In the first phase, you will analyze the costs of your business. In the second phase, you will make sales forecasts, conduct cost-volume-profit analysis, and prepare budgeted financial statements. In the third phase, you will perform variance analysis and come up with strategies to improve the profitability of your business.

Phase One (15 points): You are an entrepreneur who will be starting a t-shirt business. Your company will rent space inside the mall. You will buy plain t-shirts and imprint them with one of twelve pictures exclusively designed for your company by a famous artist who is a friend of yours. Your target customers are teenagers and young adults and you plan on selling your t-shirts for $15 each. Your business is scheduled to open on January 1, 2020. Below is the cost information for your company:

1. The mall charges you $2,500 rent per month which includes utilities, telephone, cleaning, and maintenance. You estimated that 90% of the rent is related to operations and 10% is related to selling and administrative activities.
2. You will purchase white, cotton t-shirts from a wholesaler for $3.75/shirt.
3. You agree to pay your artist friend a $10,000 annual contract fee for designing 12 new t-shirts each year for your business.
4. You will buy a computer and printer that cost $6,000 which is expected to last 3 years with no salvage value. You will use straight-line depreciation method. You estimate 90% of the computer and printer will be used for operations and 10% will be used for selling and administrative activities.
5. You purchase a heat press machine for $4,500 which is expected to last 3 years with no salvage value. The machine is used only for imprinting the t-shirts.
6. You will purchase transfer paper that cost $400/case and contains 1,000 sheets of transfer paper. One sheet of transfer paper will be used to print one t-shirt.
7. You will purchase ink-jet cartridges that cost $50 and can make 500 prints. Each t-shirt requires one print. You will also need to print flyers for selling and administrative purposes. For this non-manufacturing printing, you will print about flyer for every 5 t-shirts sold.
8. You will purchase laser paper for $20/ream which contains 200 sheets of laser paper.
9. You will hire three part-time employees. You will pay each employee $8/hour. On average printing 10 t-shirts will take one hour of labor.
10. You will do all of the selling and administrative work by yourself and will be paid $12,000/year.
11. To protect your business from legal obligations, you will purchase a liability insurance that cost $3,600/year.

Phase One Requirements:

1. Come up with an attractive name for your business.
2. Determine which and how much of your costs are variable costs. List the manufacturing and non-manufacturing cost items and present each of them in cost per T-shirt basis.
3. Determine which and how much of the costs are fixed costs. List the manufacturing and non-manufacturing costs items and present each of them in total cost per month.
4. Calculate the contribution margin, break-even point, and target profit

Phase One - Excel Search Paige Garrett PG - O X AutoSave File Home H D Insert Page Layout Formulas Data Review View Help QuickBooks Share Comments Formula Bar Ruler Gridlines Split Hide Unhide - View Side by Side DI Synchronous Scrolling C Reset Window Position Headings Zoom Normal Page Break Page Custom Preview Layout Views Workbook Views 100% Zoom to Selection Zoom Macros New Window Arrange Freeze All Panes Switch Windows Show Window Macros B19 : D E F G H 3 1. Your Company Name: 4 5 2. and 3. Detailed list and classification of costs 6 Please show or explain your computations in a readable/understandable format. 7 No points will be given if no explanations are provided. 8 9 Variable costs and Expenses 10 (Round your numbers to the hundreth, ie. $x.xx) Cost Items 12 Manufacturing 13 14 Explanations: 15 11 Cost Per T-Shirt 16 17 18 Explanations: 19 20 21 (3) Ink Jet 22 22 Ink lot Cartridae cost is 50 and make 500 each nrint renuires one t.shirt nrint and Sheet1 Ready 9 0 + -- 0 o ema WM QD A 9 + 7:55 PM 4/6/2020 Type here to search ^ . (1