Week 7 ACC 5301

Essay Instructions:

****PLEASE ENSURE YOU ARE FOLLOWING THE REVISION COPY OF THE SAC COOKIE. ALSO MAKE SURE THE EXCEL TABLE IS IN THE TABLE AS AN APPENDIX*** Cookie Business Final Project Now that your cookie business is well underway, you are going to use the knowledge that you have gained in this course to evaluate the financial information for the company. You will be creating a series of reports and analyzing the results using the templates provided to guide you through the project. The learning objectives of this project are as follows: Apply accounting concepts and standards to the creation of accounting information and reports. Analyze accounting information used to make strategic business decisions. Apply ethical behavior to accounting-related situations. Make business decisions based on analyzing accounting data. Using the Unit VII Final Project Template, prepare a four- to five-page written report (including spreadsheets) with at least three scholarly sources. Your report will provide the following information: Introduction Part 1: Based on the data presented in the Unit VII Spreadsheet Template in Excel (CM Breakeven tab): Calculate the contribution margin (CM) for each of the three products sold at the cookie business. Calculate the weighted average CM. Calculate the breakeven point. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results based on your calculations as far as which type of cookie you think is the most profitable, which has the highest CM, etc. Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete the calculations listed below. Calculate the value of ending inventory under full or absorption costing. Calculate the value of ending inventory under variable costing. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results, and comment on which method you think is more helpful to managers and why. Part 3: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Special Order tab), calculate the net increase or decrease in profit if they take the special order. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results and comment on if you think the cookie business should take on this special order of cookies for a wedding. Business has been slow the last few months, and the offer is less than the usual selling price for the cookies. As part of your discussion, include both quantitative (based on the numbers) and qualitative (not based on numbers) factors that would go into the decision to take on the special order. Part 4: Based on the data presented in the Unit VII Spreadsheet Template in Excel (IRR tab), calculate the internal rate of return (IRR) for the new equipment purchase. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Note: the PV Annuity table is provided for you. Discuss if you think the cookie business should accept or reject the purchase of the new equipment and why. Additional information has come to your attention regarding the equipment purchase. One of the partner's brother owns the company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type of transaction. Part 5: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Cash Budget tab), calculate the cash receipts for the first quarter of this year. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss your observations about the way cash is collected if the company needs $150,000 per month for expenses. Part 6: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Variances tab), complete the following calculations. Calculate the material variances. Calculate the labor variances. Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss your observations about the variances and ways to plan to improve any of the variances. Conclusion and Recommendations Summarize the key observations that you have made about the cookie business based on the calculations you have performed, and present any future recommendations.

Essay Sample Content Preview:

Sac Cookie Financial Analysis Your Name Subject and Section Professor’s Name April 3, 2024 As a startup brand within a bustling yet competitive market, Sac Cookie’s approach is characterized by strategic growth, leveraging high-quality, local ingredients that define our brand. Accordingly, in the succeeding sections, a data-driven strategy is conducted in order for the company to be able to ensure operational efficiency and make sound investment choices that would define it against its competitors. Finally, however, it must be noted that the main goal of this analysis is to provide actionable insight regarding sustained growth, operational excellence, and the fortified trust of our customers and stakeholders. Part 1. Product Profitability and Cost Analysis One of the notable characteristics of the company is its strong market capacity in terms of profitability. Sac Cookie offers three main products: (1) chocolate chip, (2) sugar cookies, and (3) specialty cookies. Upon conducting the said analysis, it could be seen that Chocolate Chip boasts a robust CM of $1,185,000 from sales of $1,875,000 (1,500,000 units sold), achieving a per-item CM of $0.79, representing the highest sales of the three products. In contrast, Sugar cookies contribute consistently with a CM of $676,200 from 980,000 units and a per-item CM of $0.69. Finally, selling 300,000 units, the Specialty cookie stands out with a CM of $969,000, translating to a per-item CM of $3.23—highlighting profitability and our commitment to quality and local sourcing (Table 1). This data also shows that despite having lesser sales revenues than Chocolate chip cookies, Speciality cookies could provide higher profit margins due to their higher per-item contribution margins. Overall, however, an analysis of our collective product line has shown that Sac Cookie must be able to sell around 122,782.84 units based on our fixed costs of $125,000 and the Weighted Average CM (WACM) of $1.02. Table 1. CM Breakeven Part 2. Inventory Valuation and Management The next part of our analysis pertains to using either full/absorption costing or variable costing to analyze how Sac Cookie could manage its inventory. The provided table (Table 2) shows that the end inventory after sale is around $180,000.00. This is the baseline to assess the amounts for each costing method. On the one hand, Full (absorption) costing includes all production costs and helps stabilize reported profits by distributing overhead across inventory levels (Gersil & Kayal, 2016). In this case, it has a unit cost of around $2.05. When used for the remaining inventory after the end of the year, we see an amount equivalent to $369,000.00. On the other hand, the variable costing method, which prioritizes direct expenses and provides immediate insight into cost behaviors, has a value of around $2.0 per unit (Table 2). When applied to the remaining inventory, we are left with an amount of $360,000.00, which shows a difference of $9,000.00. Accordingly, given that our current sales amount to 2.6 million units of cookies, variable costing's real-time profitability picture suggests an operational agility and flexibility aligned with Sac Cookie's growth narrative. Thus, variable costing may be an edge over strategic agility as the preferred method for Sac Cookie’s Inventory Valuation and Management (Arokodare & Asikhia, 2020). Table 2. Full Variable Part 3. Special Order Financial Impact Aside from costing and inventory, managing both anticipate...

Updated on June 21, 2024

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