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ACC 207Final Project Milestone OneGuidelines and Rubric
Draft of Costs (Section I)
Overview: Classifying a company’s costs allows for an in-depth analysis of the impact that changes in output have on revenues, costs, and net income or net loss. A cost-volume-profit (CVP) analysis will be completed in order to determine the breakeven point. Relevant costs will be used to prepare a flexible budget. Additionally, an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale. Finally, a memo should be prepared formanagementthatsummarizesthe results of the quantitative analysis and makesrecommendations for an optimal costing system to be ethically used by key decision makers.
For Milestone One, you will use the MDE Manufacturing Budget(Table I)to analyze costs, contribution margin, and breakeven point for the bird feeder divisionof the company. In Tab 1 of your Student Workbook, classify costs as either product or period costs. Briefly explain the difference between the types of costs. Then, analyze the actual costs and,using Tab 2of your Student Workbook,complete a cost-volume-profit analysis to determine how many bird feedersmust be sold at the current cost and sales price level to earn a $10,000profit andhow much the sales price would have to increase to earn a $10,000profit at the same cost and sales volume level. Submit the Student Workbookwith Tabs1and 2completedwith your cost calculations and a 1–2 page Word document that explains the implications ofyour findings and addresses all of the critical elementsin Section I.
Specifically,the following critical elementsmust be addressed:
I. Costs
a) Classify all product and period costs appropriately.
b) Compute a cost-volume-profit analysis. What are the implications of this analysis?
c) Compute contribution margin per unit and contribution margin ratio.
d) Determine the breakeven quantity and the breakeven revenue accurately.
e) Determine if the company is breaking even. What are cost-volume-profit analysis implications on short-term planning?
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