M5A2: Course Project Final Paper

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ITEM NO.of Item Sold/Day Cost per Item Jan Feb Mar Apr May June July August September October November December
Coffee 40 $2.00 $2,160 $1,920 $2,160 $2,080 $2,160 $2,080 $2,160 $2,160 $2,080 $2,160 $2,080 $2,160
Espresso 20 $3.00 $1,620 $1,440 $1,620 $1,560 $1,620 $1,560 $1,620 $1,620 $1,560 $1,620 $1,560 $1,620
Scones 15 $4.00 $1,620 $1,440 $1,620 $1,560 $1,620 $1,560 $1,620 $1,620 $1,560 $1,620 $1,560 $1,620
Bear Claw 20 $1.50 $810 $720 $810 $780 $810 $780 $810 $810 $780 $810 $780 $810
Total Monthly Revenue $6,210 $5,520 $6,210 $5,980 $6,210 $5,980 $6,210 $6,210 $5,980 $6,210 $5,980 $6,210
TotalAnnual Returns $72,910
Cost Drivers
DIRECT MATERIALS' COSTS Monthly Costs Jan Feb Mar Apr May June July August September October November December
Roasted Coffee $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90
Sugar $69 $69 $69 $69 $69 $69 $69 $69 $69 $69 $69 $69 $69
Milk $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40 $206.40
TOTAL DIRECT MONTHLY MATERIAL'S COSTS $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40 $365.40
TOATAL ANNUAL COST $4,384.40
DIRECTt LABOR COSTS Monthly Costs Jan Feb Mar Apr May June July August September October November December
Waiter $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720 $720
Counter Waiter $480 $480 $480 $480 $480 $480 $480 $480 $480 $480 $480 $480 $480
TOTAL DIRECT MONTHLY MATERIAL'S COSTS $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
TOTAL ANNUAL COST $14,400
OVERHEAD COSTS Monthly Costs Jan Feb Mar Apr May June July August September October November December
Rent $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650
Insurance Cover $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Electricity $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Water $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
TOTAL MONTHLY OVERHEAD COSTS $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
TOTAL ANNUAL OVERHEAD COST $18,000
Gross Profit
Total Annual returns $72,910 $6,210 $5,520 $6,210 $5,980 $6,210 $5,980 $6,210 $6,210 $5,980 $6,210 $5,980 $6,210
Total Annual Costs $36,784.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40 $3,065.40
Gross Profit $36,125.60 $3,144.60 $2,454.60 $3,144.60 $2,914.60 $3,144.60 $2,914.60 $3,144.60 $3,144.60 $2,914.60 $3,144.60 $2,914.60 $3,144.60
Selling and Administrative Expenses
Monthly Costs Jan Feb Mar Apr May June July August September October November December
Office Rent 600 600 600 600 600 600 600 600 600 600 600 600 600
Advertising 200 200 200 200 200 200 200 200 200 200 200 200 200
Office Electricity and Utilities 300 300 300 300 300 300 300 300 300 300 300 300 300
Manager's Salary 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
Total Monthly Selling and Administrative Costs 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100
Total Annual Selling and Administrative Expenses $ 25,200
Total Jan Feb Mar Apr May June July August September October November December
Gross Profit $ 36,125.60 $3,144.60 $2,454.60 $3,144.60 $2,914.60 $3,144.60 $2,914.60 $3,144.60 $3,144.60 $2,914.60 $3,144.60 $2,914.60 $3,144.60
Total Annual Selling and Administrative Expenses $ 25,200.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 2,100.00
Net Profit $ 10,925.60 $1,044.60 $354.60 $1,044.60 $814.60 $1,044.60 $814.60 $1,044.60 $1,044.60 $814.60 $1,044.60 $814.60 $1,044.60
Selling and Administrative Expenses. We have considered the following selling and administrative expenses: Office Rent $600 per month Manager’s Salary $1,000 per month, Advertising Expenses $200 per month and Office electricity and utilities charges $300 per month. All these expenses are fixed in nature. Thus, monthly selling and expenses will be of $2,100 and Annually these will be of $25,200. The budgeted gross profit of the business is $36125.60 and therefore the budgeted net profit after considering the above selling and administrative expenses will be $10925.60 ($36125.60 - $25,200). Reference: Ray H Garrison, Eric Noreen and Peter C. Brewer Professor. Loose-leaf for Managerial Accounting. McGraw-Hill Education; 15th edition (January 3, 2014)

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