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linda_us
linda_us, Master's Degree
Category: Business and Finance Homework
Satisfied Customers: 852
Experience:  A tutor for Business, Finance, Accounts and other related topics.
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I need help with my Accounting Project.You would like

Customer Question

Hi, I need help with my Accounting Project.
You would like to start a business manufacturing a unique model of bicycle helmet. In preparation for an interview with the bank to discuss your financing needs, you develop answers to the following questions. A number of assumptions are required (and some are provided for you below); clearly note all assumptions that you make.
Instructions
(a) Identify the types of costs that would likely be involved in making this product by populating a spreadsheet with the five columns indicated below.
Product Costs
Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
I would like to see a minimum of 6 manufacturing overhead costs and 7 period costs. You should show one line item for both direct materials and direct labor but please provide some detail of the costs in parentheses. For example, if you were manufacturing a car you would write Direct Materials (steel, aluminum, plastic, etc.).
Assign hypothetical monthly dollar figures to each costs you identified. The totals for each column must be $300,000 for Direct Materials, $160,000 for direct labor, $100,000 for Manufacturing Overhead, and $500,000 for period costs.
(b) Assume you have no raw materials or work in process beginning or ending inventories. Prepare a projected cost of goods manufactured schedule for the first month of operations.
(c) You must produce 80,000 helmets the first month of operations. Compute the cost to produce one bicycle helmet.
(d) What type of cost accounting system will you likely use—job order or process costing? Explain your answer!
(e) Explain how you would assign costs in either the job order or process costing system you plan to use.
(f) Classify your costs as either variable or fixed costs. For simplicity, assign all costs to either variable or fixed, assuming there are no mixed costs, using the format shown.
Item Variable Costs Fixed Costs Total Costs
(g) Compute the unit variable cost (rounded to two decimal places), using the production number in (c).
(h) You will sell 75,000 helmets the first month of operations. Set a unit selling price between $15 and $20 rounded to the nearest whole dollar, and compute both the contribution margin per unit and the contribution margin ratio.
(i) Determine your break-even point in dollars and in units.
(j) Prepare projected operating budgets (sales, production, direct materials, direct labor, manufacturing overhead, selling and administrative expense, and income statement). You will need to use the below assumptions for each of the following:
Direct materials budget: 0.3 Kg of direct materials required to produce one helmet; $12.50 per Kg; desired ending direct materials (assume none).
Direct labor budget: 0.2 hours required per helmet; rate is $10.00 per hour.
Budgeted income statement: Income tax expense is 30% of income from operations.
(k) Prepare a cash budget for the month. Assume the percentage of sales that will be collected from customers is 75%, and the percentage of direct materials that will be paid in the current month is 75%. Income taxes are not paid this month.
(l) The relevant range of activity is from 75,000 to 80,000 helmets per month. Recast your manufacturing overhead budget into a flexible monthly budget for each increment of 1,000 helmets produced from 75,000 to 80,000 helmets.
(m) Identify one potential cause of materials, direct labor, and manufacturing overhead variances for your product.
(n) Assume that you wish to purchase production equipment that costs $4,000,000. Determine the cash payback period, utilizing the monthly cash flow that you computed in part (k) multiplied by 12 months (for simplicity).
(o) Identify at least three items for additional consideration before commencing your business venture.
Submitted: 1 year ago.
Category: Business and Finance Homework
Expert:  F. Naz replied 1 year ago.
What is your deadline, and what is the size of answers in words or in page length, thanks.
Customer: replied 1 year ago.
My deadline will be Wednesday.
If you can do some part by tomorrow, it will be even better.
Expert:  F. Naz replied 1 year ago.
What should be the length of answer in words or page length, thanks.
Customer: replied 1 year ago.
Anywhere from 5 pages more
Expert:  F. Naz replied 1 year ago.
I have sent you the offer as the assignment is lengthy and require calculations as well, thanks.
Customer: replied 1 year ago.
If you reduce it to 3 pages how much will it be?
Expert:  F. Naz replied 1 year ago.
3 pages double spaced, the fair price will be $295. if you agree I can send you another offer, thanks.

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