Question 1:

Prepare a mission statement; set strategic, tactical, and operating objectives; decide on a company name; set cookie specifications, and decide on a cookie recipe. Additionally, you will calculate a standard cost per cookie.

Deliverables

Develop a Microsoft PowerPoint presentation that concisely presents the following information regarding your cookie company:
1. Consider the company's mission.
a. Will you focus on quality, volume, or satisfying a niche?
b. Will you sell using a traditional brick & mortar storefront or through eCommerce? Who is your target market?
c. What are your expansion plans?
d. What will be your main products? Where will you operate?
2. Write a mission statement for your company that reflects the decisions you made in the previous step.
3. Based on your company's mission, describe the long-range goals, strategies, and objectives that your company will pursue.
4. Decide upon a company name.
5. Determine cookie specifications: size, color, key ingredients, appearance, quantity and packaging.
6. Develop a recipe that fits with your mission, goals, and specifications.
7. Create a job cost card for your cookie recipe and calculate cost per cookie. Assume overhead is allocated at a rate of $2 for every $1 of labor cost.
8. List some of the costs you will include in overhead.

Save your assignment as a Microsoft PowerPoint presentation.

Question 2:

This week you will analyze and classify the costs of your cookie company and evaluate contribution margin.

Review your Project Submission from Module 01 where you developed a job cost card for your cookie and made a list of potential overhead costs.

1. Create an Excel spreadsheet as outlined below. Be sure that your completed spreadsheet has answers to all the questions below.

2. In a table, on the first tab of the spreadsheet, classify your costs as variable, fixed, or mixed.
Note: Now that you have a more robust understanding of cost accounting you may need to add some overhead costs to your list. Think about both the ecommerce costs as well as the production facility costs.

3. On the second tab of your Excel spreadsheet, prepare a high-low analysis of your electric costs using the following data. What is your fixed cost of electricity? What is the variable cost of electricity?

4. On the third tab of your spreadsheet prepare a daily contribution margin income statement based on your cost card from Module 01.
Note: You must make some realistic assumptions about your fixed costs, sales level, and selling and administrative costs. Be sure to list all your assumptions. What is the contribution margin ratio?

5. On the fourth tab of your spreadsheet, calculate the break-even in number of cookies per day. What is the break-even in sales dollars each day? How many cookies must you sell to earn a daily profit of $1000? Does this seem realistic?

Question 3:

Your cookie company is growing but not as rapidly as you would like. You are exploring producing products for businesses. During a recent conversation with the owner of a local car dealership, he offered to buy 500 cookies for a special event in the community. He asked that the cookies be displayed in the shape of a car and he would like the dealership's logo on each cookie. He has agreed that the cookies can be your signature flavor.

The display will cost $200 to build and the logo for each cookie will cost $.03. This is a rush order and may require some overtime. You are required to deliver the cookies to the event and provide a napkin for each cookie.

The business owner would like a deal since he is purchasing so many cookies and you are "getting your name out there". This could potentially lead to more business.

Prepare calculations to determine what price you will charge the business owner for the entire project. After presenting the bid to the business owner, he offered to pay 85% of what you would like to charge. Can you do it for the reduced price and still make a profit? Prepare a new cost analysis assuming the new price.

Prepare detailed analysis for each part of the assignment, outlining all your costs and revenues. Clearly explain whether you will take the job at the reduced price or pass on it. Explain why.

Question 4:

You are considering purchasing a new production facility to expand operations. The building and machinery will cost $800,000 and be depreciated over 10 years using the straight-line method with no salvage value at the end of the equipment-life. You require a 12% rate of return on the project.

The cost and revenue information follows in the table below:

1. Determine the NPV of the new facility.
2. Calculate the IRR (approximate).
3. Calculate the payback period.
4. Calculate the accounting rate of return.
Taking into considerations all the calculations above, will you invest in the new production facility? Why or why not? What nonfinancial information will you consider in your decision?