5 star only!!!

PART #1a

Review Decision Case 1 (Steve and Linda Hom) starting on page 984 of your text. In your initial post, answer the two case questions:

1. Compute the annual breakeven number of meals and sales revenue for the restaurant.

2. Compute the number of meals and the amount of sales revenue needed to earn operating income of $75,600 for the year.

In addition, address the following in one to two paragraphs:

1. Identify and discuss several qualitative factors that should be considered in the decision process in addition to the quantitative data already computed in the case assignment.

2. What are the potential benefits of applying CVP analysis to business decision making?

3. Provide an example of another business scenario that could benefit from CVP analysis and explain how you would apply CVP analysis in the decision-making process.

Case 1. Steve and Linda HOM live in Bartlesville, Oklahoma. Two years ago, they visited Thailand. Linda A professional chef, was impressed with the cooking methods and the spices used in the thai food. Bartlesville does not have a thai restaurant, and the Homs are contemplating opening one. Linda would supervise the cooking, and Steve would leave his current job to be the maitre d’. The restaurant would serve dinner Tuesday-Saturday. Steve has noticed a restaurant for lease. The restaurant has seven tables, each of which can seat for. Tables can be moved together for a large party. Linda is planning two seatings per evening, and the restaurant will be open 50 weeks per year.

The Homs have drawn up the following estimates:

Average revenue, including beverages and dessert	$45	Per meal
Average cost of food	$15	Per meal
Chefs and dishwashers salaries	$61,200	Per year
Rent (premises, equipment)	$4,000	Per month
Cleaning (linen and premises)	$800	Per month
Replacement of dishes, cutlery, glasses	$300	Per month
Utilities, advertising, telephone	$2,300	Per month

Requirements:

1. Compute the annual breakeven number of meals and sales revenue for the restaurant.

2. Also compute the number of meals and the amount of sales revenue needed to earn operating income of $75,600 for the year.

Part #1b

At the end of each module, you will apply the module’s concepts by completing comprehensive assignments from the textbook.

Complete problems P16A-17B (p. 898), P16A-19B (p. 899), P18-24A (p. 979), P18-26A (p. 980) in your textbook.

Present your analysis of the assigned problems in Excel format. Enter non-numerical responses in the same worksheet using textboxes.

· P16A-17B: Sue Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The assembly department had no work in process on March 31. In med-April, Sue Electronics started production on 100,000 CD players. Of this number 76,100 CD players were assembled during April and transferred out to the programming department. The April 30 work in process in the assembly department was 40 % of the way through the assembly process. Direct materials costing $378,720 were placed in production in assembly during April, and direct labor of $157,700 and manufacturing overhead of $98,505 were assigned to that department.

Requirements:

1. Draw a timeline or the assembly department

2. Use the time to help you compute the number of equivalent units and the cost per equivalent unit in the assembly department for April.

3. Assign total cost in the assembly department to (a) units completed and transferred to programming during April and (b) units still in process at April 30.

4. Prepare a T-account for work in process inventory, assembly to show its activity during April, including the April 30 balance.

· P16A-19B: Roots exteriors produces exterior siding for homes. The preparation department begins with wood, which is chopped in small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the compression department, where the wood is compressed into sheets. Conversion cost are added evenly throughout the preparation process. March data for the preparation department are as follows (in millions):

Sheets		Costs
Beginning work in process inventory	0 sheets	Beginning work in process inventory	$0
Started production	3,300 sheets	Costs adding during March:
Completed and transferred out to		wood	2,600
Compression in March	1,900 sheets	adhesive	1,365
		Direct labor	640
Ending work in process inventory (45%	____________	Manufacturing overhead	2,445
Of the way through the preparation process)	1,400 sheets	Total costs	$7,050

Requirements:

1. Draw a timeline for the preparation department

2. Use the time to help you compute the equivalent (hint- each direct ,material added at a different point in the production process requires its own equivalent-unit computation.)

3. Compute the total cost of the units (sheets)

a. Completed and transferred out to the compression department.

b. In the preparation departments ending work in process inventory.

4. Prepare the journal entry to record the cost of the sheets completed and transferred out to the compression department.

5. Post the journal entries to the work in process inventory, preparation T-account. What is the ending balance?

· P18-24A: British Productions performs London shows. The average show sells 1,200 tickets at $5 per ticket. There are 120 shows a year. The average show has a cast of 70, each earning an average of $300 per show. The cast is paid after each show. The other variable cost is a program-printing cost of $& per guest. Annual fixed cost total $459,000.

Requirements:

1. Compute revenue and variable cost for each show.

2. Use the income statement equation approach to compute the number of shows British Productions must perform each year to break even.

3. Use the contribution margin approach to compute the number of shows need each year to earn a profit of $3,825,000. Is this profit goal realistic? Give your reasoning.

4. Prepare British Productions’ contribution margin income statement for 120 shows for 2011. Report only two categories of cost: Variables and fixed.

· P18-26A: Big time investor group is opening an office in Dallas. Fixed monthly cost are office rent ($8,200), depreciation on office furniture ($1,500), utilities ($2,300), special telephone lines ($1,300), a connection with an online brokerage service ($2,900), and the salary of a financial planner (9% of revenue), advertising (12% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (5% of revenue).

Requirements:

1. Use the contribution margin ratio CVP formula to compute Big time’s breakeven revenue in dollars. If the average trade leads to $800 in revenue for big time, how many trades must be made to break even?

2. Use the income statement equation approach to compute the dollar revenues needed to earn a target monthly operating income of $11,200.

3. Graph big time’s CVP relationship. Assume that an average trade leads to $800 in revenue for big time. Show the breakeven point, the sales revenue line, the fixed cost line, the total cost line, the operating loss area, the operating income area, and the sales in units (trades) and dollars when monthly operating income of $11,200 is earned. The graph should range from ) to 80 units.

4. Suppose that the average revenue big time earn increases to $900 per trade. Compute the new breakeven point in trades. How does this affect the breakeven point?

PART #2a

Review the Decision Case 1 (Harris Systems) located on page 942-943 in you textbook. Answer the four case questions in the Requirements section of the case. In addition, address the following in one to two paragraphs:

· Compare and contrast ABC costing and traditional costing methods, giving examples.

· In the assigned case, which system provides a more accurate picture of the cost incurred to produce the jobs?

· Provide examples of manufacturers in your geographic area and explain which system would be best for them.

Respond to each directive or question in 1–2 paragraphs. Apply current APA standards for writing style to your work.

Case 1. Harris systems specializes in servers for workgroup, e-commerce, and ERP applications. The company's original job costing system has two direct cost categories: direct materials and direct labor. Overhead is allocated to jobs at the single rate $22 per direct labor hour. A task force headed by Harris CFO recently designed an ABC system with four activities. The ABC system retains the current systems two direct cost categories. Thus, it budgets only overhead costs for each activity. Pertinent data follow:

Activity	Allocated Base	Cost Allocated Rate
Materials handling	Number of parts	$ 0.85
Machine setup	Number of setups	500.00
Assembling	Assembling hours	80.00
shipping	Number of shipments	1,500.00

Harris Systems has been awarded two new contracts, which will be produced as job A and job B. budget data relating to the contracts follow:

	Job A	Job B
Number of parts	15,000	2,000
Number of setups	6	4
Number of assembling hours	1,500	200
Number of shipments	1	1
Total direct labor hours	8, 000	600
Number of output units	100	100
Direct materials cost	$220,000	$30,000
Direct labor cost	$160,000	$12,000

Requirements:

1. Compute the product cost per unit for each job, using the original costing system (with two direct cost categories and a single overhead allocation rate).

2. Suppose Harris systems adopts the ABC system. Compute the product cost per unit for each job using ABC.

3. Which costing systems more accurately assigns to jobs the cost of the resources consumed to produce them? Explain.

4. A dependable company has offered to produce both jobs for Harris for $5,400 per output unit. Harris may outsource (buy from the outside company) either job A only, job B only, or both jobs. Which course of action will Harris’s managers take if they base their decision on (a) the original system? (b) ABC system cost? Which course of action will yield more income? explain

Case 2. To remain competitive Harris systems management believes the company must produce job B-type serves (from decision case 1) at a target cost of $5,400. Harris systems has just joined a B2B e market site that management believes will enable the firm to cut direct materials costs by 10%. Harris management also believes that a value-engineering team can reduce assembly time.

Requirements:

1. Compute the assembling cost saving per job B-type server required to meet the $5,400 target cost. (hint: begin by calculating the direct materials, direct labor, and allocated activity costs per serve.)

PART #2b

Review Whole Foods Market, Inc’s 2010 Annual report, company information and investor information(see the link: Whole Foods Market, Inc. Investor Relations in the webilography) and write a 4-5 page paper following APA guidelines which addresses the following:

1. Summarize the company’s financial performance for 2010. Do you think they satisfied stockholder expectations? Why or why not?

2. Explain three business risks or threats that might threaten Whole Foods ability to accomplish their financial goals for the next 3 years. Use examples and references to support your response.

3. Describe three examples of control activities Whole Foods Market, Inc. could use to minimize these risks.

4. What is your overall impression of Whole Foods Market, Inc.’s annual report? Is it a financial accounting document or a managerial accounting document? Who is the target audience? Did the annual report present a positive or negative image of the company? Provide support for your responses.

http://www.wholefoodsmarket.com/company-info/investor-relations/annual-reports

PART #3a

Review Decision Case 1 (Donna Tse) located on page 1127 in you textbook. Answer the case question in the Requirements section of the case. Your memo should be at least two paragraphs in length.

Case 1. Donna Tse has recently accepted the position of assistant manager at Cycle World, a bicycle store in St. Louis. She has just finished her accounting course. Cycle world's manager and owner, Jeff Towry, asks Tse to prepare a budget income statement for 2011 based on the information he has collected. Tse’s budget follows:

	Cycle World Budgeted Income Statement For the year Ending July 31, 2011
Sales revenue		$244,000
Cost of goods sold		177,000
Operating expense:
Salary and commission expense	$46,000
Rent expense	8,000
Depreciation expense	2,000
Insurance expense	800
Misc. expense	12,000	68,800
Operating loss		(1,800)
Interest expense		(225)
Net loss		$ (2,025)

Requirement

1. Tse does not want to give Towry this budget without making constructive suggestions for steps Towry could take to improve expected performance. Write a memo to Towry outlining your suggestions.

PART #3b

At the end of each module, you will apply the module’s concepts by completing comprehensive assignments from the textbook.

Complete problems P21-20A (p. 1121), P21-21A (p. 1122), and P21-22A (p.1123) in your textbook.

Present your analysis of the assigned problems in Excel format. Enter non-numerical responses in the same worksheet using textboxes.

· P21-20A: Doggy World operates a chain of pet stores in the midwest. The manager of each store reports to the regional manager, who, in turn, reports to the headquarters in Milwaukee, Wisconsin. The actual income statements for the Dayton store, the Ohio region (including the Dayton store), and the company as a whole (including the Ohio region) for July 2011 are as follows:

	Doggy World Income Statement	For the month Ended July 31, 2011
	Dayton	Ohio	Companywide
revenue	$158,400	$1,760,000	$4,400,000
expenses
Regional manager/headquarters office	$ 0	$ 58,000	$ 122,000
Cost of materials	85,536	880,000	1,760,000
Salary expense	41,184	440,000	1,100,000
Depreciation expense	7,800	91,000	439,000
Utilities expense	4,000	46,600	264,000
Rent expenses	2,500	34,500	178,000
Total expenses	141,020	1,550,100	3,863,000
Operating income	$ 17,380	$209,900	$537,000

	Doggy World Income Statement	For the month Ended July 31, 2011
	Dayton	Ohio	Companywide
revenue	$173,400	$1,883,000	$4,650,000
expenses
Regional manager/headquarters office	$ 0	$ 64,600	$ 124,000
Cost of materials	91,902	1,035,650	2,092,500
Salary expense	41,616	470,750	1,162,500
Depreciation expense	7,800	87,500	446,000
Utilities expense	4,900	54,600	274,000
Rent expenses	3,400	32,700	169,000
Total expenses	149,618	1,745,800	4,268,000
Operating income	$ 23,782	$137,200	$382,000