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Check LiveText for due date and details on how to submit the assignment.  You must upload the assignment in LiveText in a single Excel file that contains three separate worksheets. You should name your file in the following manner:  “yourname_BA216_proj”. Your work product should demonstrate your proficiency at creating documents in Excel, including but not limited to formatting and formula use.
Below is the information needed to complete the special project relating to select accounting topics. No assistance should be sought from anyone except your instructor.

Financial information for the project:

1) You decide to open a small business in Charleston, WV that will cater primarily to busy office workers downtown.  You are going to offer a gourmet box lunch to be delivered to any office with a minimum number of 5 orders. This lunch will include a gourmet sandwich, a bag of chips, a cookie, and a bottle of water. Because you are using only the finest ingredients, you will charge $7.25 per lunch.

2) The cost of the food items (cost of goods sold) in each lunch is budgeted at $3.10. These are primarily perishable items, so inventory is negligible.  You pay for virtually all of your purchases by check at the time they occur.

3) You are planning on drawing out a monthly salary of $1200.

4) You are planning on hiring an assistant to help you with packing the box lunches and delivering them 20 hours per week at $7.60 per hour.  Assume four weeks in the month. Assume you will pay your assistant regardless of the hours they are actually needed. Treat this as a fixed cost.

5) You believe you must heavily advertise to get your business established. The amount you are willing to spend is 5% of your monthly revenue.  Even though you are using sales revenue to determine the dollar amount of your advertising, treat this as a fixed cost. Advertising costs are paid in the month incurred.

6) You have to pay rent on a commercial kitchen where you will store your items and prepare your box lunches. The rent is $400 per month. Rent is payable on the 1st day of the month.

7) You will rely on a fax machine to receive your orders. The cost of the phone line is $95 per month. Payment for the current month will occur in the next month when the bill is received.

8) You received an electric bill on the last day of the month payable on the 20th of the following month. It was for $235. Your electric usage is very stable; therefore you treat it as a fixed cost.

9) Sales are primarily cash. There are a few corporate clients you have extended credit to. You estimate 12% of total sales will be collected in the next month. Because this is the first month of operations, there are no outstanding accounts receivables. 

10) In order to deliver the lunches you have leased a delivery truck. The lease is a two-year lease at $375 per month. The variable cost of operating the delivery truck is $0.46 per lunch delivered. The lease payment is paid at the beginning of the month and all variable costs are paid as incurred.

11) Based on your business plan you drew up, you decided to invest $6000 of your own money to get your business started.  Prior to beginning business operations, you spent some of this $6000 as start-up costs (in prior months) leaving you with a cash balance at the beginning of the first month of operations of $2900.

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M9154

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