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%
nufactures 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
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