Accounting expert

Managerial Accounting, ACCT 102

Professor Kelson

Summer Job

Project Narrative:

This summer you’ve decided to take on a new venture. After the spring semester

ends, you’re returning to your hometown for a few weeks. A local church is

running its annual carnival and has offered you an opportunity to set up a

booth. You have the chance to relive some of your favorite childhood food

memories! In your booth space, you can sell any food item you wish (i.e.

candied apples, cotton candy, poutine, lemonade, funnel cake, deep-fried

Snickers). The carnival will run in the evenings for six days; each evening

from 6:00 pm – 10:00 pm.

 As operator of this booth, you will need to buy all the materials, hire all of your labor (if needed), and pay 12.5% of your sales revenue to N&A

Amusement Company and 12.5% of your sales revenue to the church.

 Additionally, you are required to pay the church a $200 rental cost (which includes utilities expense) for the booth space.

You are very excited to put your managerial accounting skills and other

business courses to use during the summer. In order to make this opportunity a

good use of your time, you need to determine the feasibility/profitability of this

venture. If successful, a good portion of the money you earn in the summer can

go towards your college education (or that much needed trip to someplace

tropical!).

Project Requirements

A. Determine your financial goal for this one-week venture.

B. Briefly describe the product that you will sell at the carnival as well as all of the costs

that you will have to incur during the week. On the Excel file (provided), classify each

cost as variable, fixed, or mixed. For mixed costs, be sure to identify the variable and

fixed components.

C. You will need to research all of your costs: direct materials, direct labor, and overhead

involved in making your product. On the Excel file tell me your source for each of these

costs (e.g. list websites where you found your information).

D. Perform market research to determine the appropriate price to charge for your product.

E. Before you begin any business venture, it is essential to perform a preliminary breakeven

analysis. Your findings provide the basis for assessing the reasonableness of this

business opportunity. An important part of this breakeven analysis is for you to

determine the contribution margin per unit. From parts C and D, you will be able to

determine your contribution margin per unit. After determining your contribution

margin per unit, answer the following questions:

1. What is the contribution margin per unit of your product? 2. What is the contribution margin ratio? 3. What are the total fixed costs? 4. What is the sales volume at the breakeven point? 5. What is the sales revenue in dollars at the breakeven point? 6. What is the sales volume in units required to reach your financial goal? 7. What is the sales revenue in dollars required to reach your financial goal?

F. In addition to your calculations, summarize your results in one paragraph. Remember,

your time to operate the booth has a value too; determine your earnings per hour to

conclude if this opportunity is worth your time.

A minimum two page Word document will address points A-F. Please organize your

thoughts in a concise and academic manner. You will be graded on content, grammar, and

spelling.

Grading Rubric

3 2 1 0

Planning

Statement as to the financial goal

Description of the carnival food product

Description of the costs to make the carnival food product

Classification of each cost as fixed, variable, or mixed

Determining the Cost and Selling Price of the Product

Direct materials

Direct labor

Manufacturing overhead

Selling price of the carnival food product

Preliminary Breakeven Analysis

Contribution margin per unit of the product

Feasibility of your target profit

Total fixed costs

Sales volume at the breakeven point

Sales revenue in dollars at the breakeven point

Sales volume in units required to reach your financial goal

Sales revenue in dollars required to reach your financial goal

Summary Paragraph Structure and Content

Content summarizes the results

Professional language and tone

Correct grammar and spelling

Paragraph organization/Flow of paper

External Research (Use, application and citation)

Adequate resources to support all cost figures and selling price

Total: ____________

Scoring:

0 - 41 points: Does not meet expectations

42 - 53 points: Meets expectations

54 - 60 points: Exceeds expectations

SOURCE: C. Andrew Lafond, LaSalle University