You will analyze and classify the costs of your cookie company and evaluate contribution margin.
Review your Individual Project Submission from Module 02 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 of 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?
|
Month
|
Kilowatt Hours used
|
Electric costs
|
|
January
|
1866
|
$230
|
|
February
|
1439
|
$202
|
|
March
|
1146
|
$197
|
|
April
|
1046
|
$190
|
|
May
|
996
|
$182
|
|
June
|
1760
|
$225
|
4. On the third tab of your spreadsheet prepare a daily contribution margin income statement based on your cost card from Module 02. Note: You will have to make some realistic assumptions about your fixed costs, sales level, and selling and administrative costs. Be sure to list all of 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 in order to earn a daily profit of $1000? Does this seem realistic?