# 4 Page Final VII Instructions Cookie Business Final Project Now that your cookie business is well underway, you are going to use the knowledge that you hav

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4 Page Final VII Instructions
Now that your cookie business is well underway, you are going to use the knowledge that you have gained in this course to evaluate the financial information for the company. You will be creating a series of reports and analyzing the results using the templates provided to guide you through the project.
The learning objectives of this project are as follows:

Apply      accounting concepts and standards to the creation of accounting      information and reports.
Analyze      accounting information used to make strategic business decisions.
Apply      ethical behavior to accounting-related situations.
Make      business decisions based on analyzing accounting data.

Prepare a four page written report (including spreadsheets) with at least three scholarly sources. Your report will provide the following information:
Introduction
Part 1: Based on the data presented in the Unit VII Spreadsheet Template in Excel (CM Breakeven tab):

Calculate      the contribution margin (CM) for each of the three products sold at the      cookie business.
Calculate      the weighted average CM.
Calculate      the breakeven point.

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results based on your calculations as far as which type of cookie you think is the most profitable, which has the highest CM, etc.
Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete the calculations listed below.

Calculate      the value of ending inventory under full or absorption costing.
Calculate      the value of ending inventory under variable costing.

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results, and comment on which method you think is more helpful to managers and why.
Part 3: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Special Order tab), calculate the net increase or decrease in profit if they take the special order.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss the results and comment on if you think the cookie business should take on this special order of cookies for a wedding. Business has been slow the last few months, and the offer is less than the usual selling price for the cookies.
As part of your discussion, include both quantitative (based on the numbers) and qualitative (not based on numbers) factors that would go into the decision to take on the special order.
Part 4: Based on the data presented in the Unit VII Spreadsheet Template in Excel (IRR tab), calculate the internal rate of return (IRR) for the new equipment purchase.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Note: the PV Annuity table is provided for you. Discuss if you think the cookie business should accept or reject the purchase of the new equipment and why.
Additional information has come to your attention regarding the equipment purchase. One of the partner’s brother owns the company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type of transaction.
Part 5: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Cash Budget tab), calculate the cash receipts for the first quarter of this year.
Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss your observations about the way cash is collected if the company needs \$150,000 per month for expenses.
Part 6: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Variances tab), complete the following calculations.

Calculate      the material variances.
Calculate      the labor variances.

Complete your calculations by filling in the highlighted cells, and embed a copy of the completed spreadsheet into this report. Discuss your observations about the variances and ways to plan to improve any of the variances.
Conclusion and Recommendations
Summarize the key observations that you have made about the cookie business based on the calculations you have performed, and present any future recommendations. See Attached
Be sure to use APA formatting throughout. Introduction

Tasty Cookie Store will offer Benne Wafers in South California, USA. Products to be offered by the company will be of premium quality. The company will implement a high technology production system for efficient production system and product costing method for accurate cost & price information. This paper aims to review how product costing methods and changes in production will affect business decisions of Tasty Cookie Store.

Impact of Product Costing Methods and Changes in Production on Business Decisions

Part 1: Business Description, Mission Statement, and Products

Tasty Cookie Store is going to start business in South California, USA for meeting Benne Wafers demand of local people. Benne wafers are small, thin, light, and crispy sesame seed cookies with nutty, sweet aroma with a milk-like, buttery taste.
Mission statement can be defined as a statement that states why the Company exists, what purpose it serves, and how it contributes or adds value for various parties (Corporate Finance Institute, 2020). Mission statement of Tasty Cookie Store is –

“To bake and serve best quality Benne Wafers prepared with premium ingredients and healthier environment, and offer excellent customer service”.

Tasty Cookie Store will offer premium quality product with higher price. It will offer variety of Benne wafers with nutty and caramel taste. Main ingredients of Benne wafers include sesame seeds, melted butter, brown sugar, egg, vanilla extract, flour, salt, and baking powder (All Recipes, 2021). Benne wafers are prepared by toasting sesame seeds on a baking sheet for minutes until lightly browned, and then adding toasted sesame seeds to a combination of melted butter, brown sugar, egg, vanilla extract, flour, salt, and baking powder. Small scoops of mixture are then baked on a lightly greased baking sheet. After removing the cookies from the oven, these will be allowed to cool. Finally, Benne wafers are packaged. The production process is handled by two employees.

Part 2: Costing and Sales Information for 1000 Cookies

Top five ingredients of Benne wafers include sesame seed, melted butter, eff, brown sugar, and flour. Total cost to be incurred for sesame seed, melted butter, eff, brown sugar, and flour for producing 1000 cookies are \$100, \$35, \$37, \$10, and \$120 respectively. Total direct raw materials cost for producing 1000 cookies is estimated as \$302. Total estimated direct labor cost \$128 in consideration of 8 working hours of two employees for two days and wage rate of \$8.00 per hour. Estimated manufacturing overhead cost is \$38.40 (30% of direct labor costs). Total estimated production cost for 1000 Benne wafers and per unit production cost of Benne wafers are \$468.40 and \$0.47 respectively. Estimated selling price of Benne wafers is \$ 0.55 given 17.42% mark-up.

Figure 1: Job order Cost Sheet for 1000 Benne Wafers

Three main processes in production of Benne wafers include Process # 01: Toasting sesame seeds, Process # 02: Adding toasted sesame seeds to other ingredients and baking, and Process # 03: Packaging. These processes are handled by three separate departments including Toasting Department, Mixing Department, and Packaging Department. Total estimated cost and per unit cost calculated and to be transferred for next department (Mixing Department) are \$285 and \$0.43 respectively.

Figure 2: Process Costing of Toasting Department

Part 3: Comparison and Contrast of Job Costing and Process Costing

Job costing is a costing system where production costs attributable to a specific unit or job are accumulated (Williams, Bettner, & Carcello, 2020). Under this costing, prime cost assigned to direct material and direct labor for an individual job are tracked. Job costing is used when operation is discrete, production involves few units, and product units are readily identifiable (Williams, Bettner, & Carcello, 2020).
Process costing is a costing system where production costs across various stages of production (termed as processes), which are distinguishable, are accumulated (Williams, Bettner, & Carcello, 2020). Under this costing, prime cost assigned to various stages of productions are tracked. Process costing is used when operation is continuous, production involves large volume of units, and product units are fungible (Williams, Bettner, & Carcello, 2020).
Process costing will provide more useful information to Tasty Cookie Store. Benne wafers production takes place in large volume. Benne wafers units are identical and production process undertakes on continuous basis. Thus, process costing is most suitable costing method for Tasty Cookie Store. With process costing, Tasty Cookie Store will have better information through –
· Accumulating and tracking of prime costs at different stages of production.
· Accumulating and tracking of prime costs at short intervals.
· Value addition information at different stages/processes of production.

Part 4: Impact of Revenue with Change in Number of Cookies Sold

Total revenue of Tasty Cookie Store will increase if total number of Benne Wafers sold can be increased. Revenue of a company can be determined by multiplying total number of Benne Wafers with per unit Benne Wafer. Given no change in per unit Benne Wafer, total revenue will be increased if total number of Benne Wafers increases.

Conclusion

Tasty Cookie Store will offer variety of Benne wafers with nutty and caramel taste. Its production process is fully computerized and handled by two employees. Top five ingredients of Benne wafers production include sesame seed, melted butter, eff, brown sugar, and flour. Estimated production cost for 1000 Benne wafers and per unit production cost of Benne wafer are \$468.40 and \$0.47 respectively. Estimated cost and per unit cost calculated and to be transferred for next department (Mixing Department) are \$285 and \$0.43 respectively. Process costing will be most suitable costing method for Tasty Cookie Store. Total revenue of the company will increase if total number of Benne Wafers sold can be increased.
References
All Recipes. (2021). Retrieved December 05, 2021, from Benne Wafers: https://www.allrecipes.com/recipe/11215/benne-wafers/
Corporate Finance Institute. (2020). Retrieved December 04, 2021, from What is a Mission Statement?: https://corporatefinanceinstitute.com/resources/knowledge/strategy/mission-statement/
Williams, J. R., Bettner, ‎. S., & Carcello, ‎. V. (2020). Financial and Managerial Accounting: The Basis for Business Decisions. 1325, Avenue of the Americas, New York City, United States: McGraw-Hill Education.

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