MP2–Product Costing(Lesson 3-5)[

Product Approvalbefore beginningthis assignment.  presentyour
prototypein a discussionthrough Canvasand can usea variety of formats(e.g. text, diagrams, video, etc.)as long as they meet the criteria from MP1 of the
assignment.Feel free to ask questions and comment on other prototypes.This is a discussion.MP3–Cost Reflection(Lesson 5)[30 points]You will need to write a 2-3 page
paper covering the following:1.Show how the actualcost of a single unit of product was determined.2.Items to be included in the manufacturing overhead
account3.Identify the type of costing that will be used(i.e. job costing orprocess costing, traditional or activity-based costingfor assigning overhead costs)4.Trends
in the industry that you should be aware of5.Primary competitors6.Concerns going forward if the project was developedand sold as part of a business.MP4–CVP Analysis
(Lesson 6)[10 points]Now that you have determined the unit cost to produce your product, identify which costs are fixed and which are variable. Determine what you feel
would be the selling price per unit of
ACC 2020 –Managerial Accounting|Page 3of 6your product. In determining the selling price, consider what the selling price of a competitor’s product would be. Now
calculate the breakeven point using only production costs(material, labor, and overhead). Assume that you are going to start a business selling your product. You
anticipate that you will incur the following costs in your first year of production:Selling expenses $ 50,000 plus 10% of sales revenueAdministrative expenses$150,000
plus 15% of sales revenueCalculate the breakeven point in units and sales dollarsusing ALL costs –manufacturing and non-manufacturing costs.Determine how many units
you must sellin order to earn a profit of $75,000.Assumingthat you actually sell 50% more units past the breakeven point. What is your margin of safety? What is your
operating leverage?How is CVP analysis used to help you plan for the future of your business?MP5–CVP Budgeting(Lesson 7)[40 points]After your first year of operations,
you decide that you need to prepare a budget for year 2. Rather than produce the product yourself, you have decided to outsource the production. You will purchase the
completed product from the new manufacturer and sell the product, but you will continue to manage the business. Assume the following information and assumptions to
help you prepare your budget:1.As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:DebitsCreditsCash
48,000Accounts receivable224,000Inventory60,000Buildings and equipment (net)370,000Accounts payable93,000Common Stock500,000Retained
earnings109,000Totals702,000702,0002.Actual sales for December and budgeted sales for the next four months are as follows:December (actual)$280,000January
$400,000February$600,000March$300,000April$200,000
ACC 2020 –Managerial Accounting|Page 4of 6a.Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The
accounts receivable at December 31 are a result of December credit sales.b.The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of
sales.)c.Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month: advertising, $70,000 per month; shipping, 5% of sales; other expenses, 3% of
sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 for the quarter.d.Each month’s ending inventory should equal 25%
of the following month’s cost of goods sold.e.One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid inthe following
month.f.During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of
$84,500.g.During January, the company will declare and pay $45,000 in cash dividends.h.Management wants to maintain a minimum cash balance of $30,000. The company has
an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per
month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end
of the quarter.Required:Using the data above, complete the following statements and schedules forthe first quarter:3.Schedule of expected cash
collections:JanuaryFebruaryMarchQuarterCash sales$ 80,000Credit sales224,000Total cash collections$304,0004.Merchandise Purchase
Budget:JanuaryFebruaryMarchQuarterBudgeted cost of goods sold$240,000*$360,000Add desired ending inventory90,000+Total needs330,000Less beginning
inventory60,000Required purchases$270,000*$400,000 sales x 60% cost ratio = $240,000.+$360,000x 25% = $90,0005.Schedule of expected cash disbursements for merchandise
purchases:JanuaryFebruaryMarchQuarterDecember purchases $ 93,000$93,000January purchases 135,000135,000270,000February purchases–
ACC 2020 –Managerial Accounting|Page 5of 6March purchases–Total cash disbursements for purchases$228,0006.Cash budget:JanuaryFebruaryMarchQuarterBeginning cash
balance$48,000Add cash collections304,000Total cash available352,000Less cash disbursements:Purchase of inventory228,000Selling/admin expense129,000Purchase of
equipment–Cash dividends45,000Total cash disbursements402,000Excess (deficiency) of cash(50,000)Financing:Etc.7.Prepare an absorption costing income statement for the
quarter ending March 31 as shown inSchedule 9in the chapter.8.Prepare a balance sheet as of March 31.9.List and briefly describe the reasons why you feel you need a
budget to operate your business.MP6–Performance Measures(Lesson 9)[40 points]After two years of operating your business, you have determined that you are not sure how
successful your business is. In order to address this concern, you have decided that you need to identify a strategy for your business and to develop a performance
measurement system to determine if your business is successful.1.Describe a business strategy that you feel would be best to make your business successful. The topic
of strategy was introduced in your text on page 11 and is also discussed on pages 432-437. You may also want to do some simple internet research on the topic of
strategy.Once you have described the strategy you would employ, explain why you feel your strategy will work.2.Prepare a Balanced Scorecard similar to Exhibits9-3and
9-4from your text.For eachof the four groups of performance measures (financial, customer, internal business processes, learning and growth), you should identify 2-3
performance measures (use Exhibit 9-4 as a guide). Your balanced scorecard must reflect and support your strategy.3.Prepare a cause-and-effect chart similar to Exhibit
9-5. Your cause-and-effect chart must reflect and match your balanced scorecard.