The requirements 4, 5 and 6 only needed
File Tools View Case Assignment LO 1 - 5.docx - Saved to this PC X Introduction: Sydney's Bakery operates a small business that bakes and sells a variety of SYDNEY'S BAKERY goods within a major city. Sydney is trying to gain a better understanding of the business's profits with the goal of identifying opportunities. Sydney has hired you to examine the operations and the respective financial data and to provide Management Accounting Consulting your expertise and recommendations. You have been hired to provide expertise to Sydney's Bakery Analysis of business operations and profitability requires an understanding of the types of costs that are incurred. Sydney has not had the opportunity to This document captures operational and financial information you will need for this assignment along with the specific requirements. evaluate costs from a management accounting perspective. Recall that classifying costs on the basis of the following, can be very beneficial You will be required to submit a response to the requirements in Microsoft Word (however you can imbed Microsoft Excel tables to support decision making. into your document). 1. Behaviour - fixed or variable Submit your response to the "Case Assignment - LO 1 -5" Dropbox on Brightspace by the deadline date established by your Instructor. 1. Traceability - direct or indirect 2. Financial reporting - product or period 3. For product costs classify as DM, DL, MOH Following is a list of costs that Sydney's Bakery incurs for one of the most popu- lar baked goods - Cinnamon Buns. Costs Annual business license fee Rent for bakery Utilities for bakery Flou Sugar Yeast Butter Eggs Vegetable Oil (spraying pans) Accounting Consultant Wages - Baker Screens 1-2 of 14 Focus + 140% Type here to search W A 6 )) ENG 4:25 PM 2021-05-06File Tools View Case Assignment LO 1 - 5.docx - Saved to this PC X Wages - Dish Washer Wages - Counter sales staff Insurance for baker *Note: The non-traceable materials have a total estimated cost of $27 for this order. Labour Following is information for the staff working on the day the order is produced & sold. All staff support the production, sales and delivery of all baked products except the baker whose work time is dedicated to this order. Baker - $35/hr for 6 hours Support staff (dishwasher, counter sales) - $15/hour for 8 hours Delivery staff - $15/hour - 3 hours Manager - $260/day Case continued on next page. Sydney's Bakery has received an order for 50 dozen cinnamon buns to be deliv Other Expenses ered to a local post-secondary institution. Following is information relevant to this order. Rent and insurance for the bakery total $3500/month. Materials Utilities $1280/month. Traceable Materials Non-traceable materials * Tip: daily calculations are based on the following calculation: $28 - Flour Water $12 - sugar Yeast $8 - milk Ground cinnamon cost * 12/365 - round to the whole dollar $5 - Butter Brown Sugar $3 - eggs Oil for baking pans Screens 5-6 of 14 Focus + 140% Type here to search W A 6 ( )) ENG 4:25 PM 2021-05-06File Tools View Case Assignment LO 1 - 5.docx - Saved to this PC X 3 January February March Sales in units 2,800 per unit 3,400 per unit 3,000 per unit Sales revenue $ 18,480 $ 6.60 $ 22,440 $ 6.60 $ 19,800 6.60 Less: COGS $ (6,160) $ (2.20) $ (7,480) $ (2.20) $ (6,600) $ (2.20) Gross Margin $ 12,320 $ 14,960 $ 13,200 Less Operating XP Insurance $ 800 $ 0.29 $ 800 $ 0.24 $ 800 0.27 Ren $ 1,800 $ 0.64 $ 1,800 $ 0.53 $ 1,800 0.60 Case continued on next page. Dep'n 700 $ 0.25 $ 700 $ 0.21 700 0.23 Advertising $ 640 $ 0.23 $ 670 $ 0.20 650 0.22 Operational information Salaries $ 7,100 $ 2.54 $ 7,850 $ 2.31 $ 7,350 2.45 Total Oper XP $ (11,040) $ (11,820 $ (11,300 Sydney's Bakery applies overhead on the basis of Baker's Direct Labour Net Income $ 1,280 $ 3,140 $ 1,900 hours. The estimated Baker DL hours for the year are 1,500 hours. The estimated manufacturing overhead is $126,000. For the reporting pe- riod, the actual overhead costs totalled $132,480 and actual Baker DL hours were recorded as 1,560. Operational results Sydney's Bakery has provided you with activity and respective costs for three months below. Screens 5-6 of 14 " Focus + 140% Type here to search W A - )) ENG 4:25 PM 2021-05-06File Tools View 7 went LO 'l , S dotx , Saved to thISPC V ------End of Case Details------ Case Assignment Requirements Requirement \"3: Requirement #1 Based on the "Operational Information\" provided in the case: 1. Calculate the predetermined overhead rate (PDOHR) 2. Determine if manufacturing overhead (MOH) was over or under applied. 3. Develop the Journal Entry necessary to close out the manufacturing over- 1. Classify the various costs in relation to the production and sale ofm head account. man buns (one of several goods produced and sold). I Any one of the costs may be classified under several classification types. For this requirement, you will analyze and classify costs that have been re- ported in Sydney Bakery's financial statements, I A table has been included at the end ofthis document which you can Requirement #4: copy and past Into your response for convenience. Place an X m the Based on the "Operational Results" information presented for January, Febru- respective cell representing the classification type. ary and March complete the following, I I - Be sure to refer back to the case details provided for details on the costs and 1 Identify the variable fixed and mixed costs the ClaSSlfICatIOn types. 2. Develop the cost formula for each of the mixed costs using the high-low method? 3. Calculate the total cost for each mixed cost at an activity level of 3,600? 4. Prepare a contribution margin format income statement for the month of This requirement focuses on the special order of 50 dozen cinnamon buns. March (3,000 units). Based on the information presented in the case: Requirement #2 1. Determine the total manufacturing costs for the order of 50 dozen cinna- Requirements continued on next page. mon buns. 2. Calculate the total manufacturing cost on a per dozen basis Requirement #5: 3. Calculate the total manufacturing costs on a per cinnamon bun basis. Screens 778 of 1A File Tools View 7 merit LO 'i , 5 Clock , Saved to thISPC V Based on the Contribution Margin format income statement you created in re qUIrement #4' calculate the followmg: Tip: use the following format for the CM Income Statement 1. Total Contribution Margin 1) Total 1) per unit 2) Total 2) per unit Revenue/cost 2. Contribution Margin per unit 3. Contribution Margin ratio 4. Break even point in S and in units 5. Number of units and sales 5 required to achieve monthly profits of $4,200. Requirement #6 Below are 2 separate proposals being considered. Create a contribution margin format income statement for the following using the March information as the base for each proposal to support your analysis and recommendations: """" End Of Case Reqmrements """ 1. The Baker believes that if she uses pecans and raisins in the basic cinna- Image Source: http:[i5.photobucket.com mon bun recipe, that sales volume will increase by 25%. The additional cost per cinnamon bun for the pecans and raisins will be $.20. What will be the new net income under this proposal? Would you recommend proceeding with this proposal? 2. Sydney believes that if she increases the monthly advertising cost by $300 that the bakery will experience a 15% sales volume increase. What will the new net income be under this proposal? Would you recommend proceeding with this proposal? Screens 9710 of 14 rucus E El F0 4'7 + 140%
