PUP1

Objectives: Demonstrate the application of the accounting concepts related to Cost Behavior and Cost –Volume-Profit interactions.

· Apply the Cost-Volume-Profit relationship to determine target profits

· Calculate the Required Sales Mix to break even.

· Calculate the Variable and Fixed Costs in a Mixed Cost scenario

· Determine Production Budgets based upon the Sales Projection.

Part 1. 20%

Boards 4 Brides customizes standard board games to depict places and events for the happy couple. These are then provided to the guests at the wedding reception. Boards 4 Brides has the following historical information and is going to use the High – Low method to determine its pricing schedule.

Using the following data, determine what Boards 4 Brides must charge for a wedding with 500 guests in order to show a profit of $1,200.

# Persons $ Costs

200 $ 1700

700 $ 5200

380 $ 3040

900 $ 6850

425 $ 3500

Part 2. 40%

Boards 4 Bucks sells 3 different Board Games: MakinMoney (MM), UpNDown (UD), ChexNBalances (CB)

Last year Boards4Bucks sold 36,000 MM games, 63,000 UD games, and 81,000 CB games.

· MM sells for $22 with a variable cost of $8

· UD sells for $28 with a variable cost of $6

· CB sells for $35 with a variable cost of $11

Fixed Costs for Boards4Bucks are $3,894,562.

The company anticipates that the sales mix proportions will remain the same. For the next year, how many board games of each title must Boards 4 Bucks sell to break even?

Part 3. 40%

Boards 4 Boomers manufactures retro board games. The company is going through its annual budgeting process. Using the following data, determine the $ Amount that must be budgeted for Direct Materials, Direct Labor, and Factory Overhead. How much will Boards 4 Boomers spend to meet the Production Budget?

Projected Sales: 1,250,000 games

Inventory Buffer Required: 100,000

Finished Goods Inventory: 68,000

DM Inventory Buffer Required: 70,000 parts

DM Current Inventory: 65,000 parts

DM = 7 parts / game

DM$ = $2.25 / part

DL = 20 minutes per part

DL$ = $21.75 / hour

Factory Overhead is Allocated at $1.10 per game