Below is the information needed to make a choice between alternative one or two. Comparing the calculations from alternative 1 and alternative 2 - which alternative do you recommend to Nathan and Cody? Why? The company can only pick one of the alternatives, due to the time and resources involved, so you will need to make a compelling case to support your decision. Be sure to identify any assumptions used in your analysis. If you use any outside sources, be sure to include a works cited page. Your summary report will need to state your choice for either alternative 1 OR 2. The report needs to be typed and be 2 pages double spaced and must include financial analysis from the information provided.

ACCT 102 Case Project Classic Coffee Company Best friends, Nathan and Cody, decided to start their own business which would bring great coffee from all over the world to their local community. Together they have formed Classic Coffee Company, or CCC (assume their coffee shop is located a few miles from our college campus). Nathan is selecting and making the coffee they serve. Cody manages the front and back office; selling coffee to customers, paying employees, and running ads for the coffee shop. Last year, the company sold 45,000 units and had the below sales and cost figures. Sales $135,000.00 Variable Costs $ 40,500.00 Contribution Margin $ 94,500.00 Fixed Costs $ 49.980.00 Income Before Taxes $ 44.520.00 Income Tax $ 13,356.00 Net Income $ 31.164.00 The team have been in business for a year. With competition rising in the coffee industry, they know that another challenging and competitive year lies ahead of them. They are considering two alternatives and have hired you to help them make some important business decisions. Classic Coffee Company Alternative 1- Bakery Facing stiff competition from other coffee and beverage shops, Classic Coffee Company (CCC) is considering expanding its products to include bakery items. CCC would now experience higher average sales amounts per customer since beverage sales may be accompanied with food sales. This would, however, increase the company's variable costs since it would need to purchase the food items from outside vendors. The following data pertains to adding the bakery option: Total sales in the number of units would increase 25% with the added bakery option. The average sales price per unit would increase from the current $3.00 to $5.00 when food sales are added to the coffee shop. The variable cost per unit would increase to $2.50 per unit to account for the added cost of bakery items. . There would be an increase in fixed costs of $25,000 for advertising to inform the public of this change. Alternative 2 - Drive Thru CCC is thinking about having a drive-thru installed. Having this amenity would help the coffee shop increase its customer base, allowing them to reach a greater number of customers. This added convenience would permit CCC to slightly increase the price of its average coffee and would not increase the per unit variable costs for the company. The following data pertains to adding the drive-thru option: This alternative is exclusive of alternative 1 Total sales in the number of units would increase by 140% from last year. The construction of the drive-thru would increase fixed costs by $129,420 - which represents one- time construction and installation costs. . This alternative would allow CCC to increase their average sales price to $3.20 a cup of coffee and their variable cost per unit would remain the same at $0.90 per unit. ALT 1 ALT 2 Correct correct Contribution Margin. Total aps Alternative 1. Bakery 180 6.25 Show your work here 342505 -20.350 Les Viriate Cout 56.250 25 (140 525 Contribution Marine 140.625 Alternative 2 - Drive-Thru 24 Show your work 100.000 3.20 345.600 Les Verte Cost 105.000 0.007200) Canirbution Mari-248.400 Allomave 1 140,625 Alternative 224.400 239 Correct correct 2 Contribution Margin-Per Unit 4 pts Alternate 12.50 Per Unit Alternative 22.30 Per Unit 2501 Show your work hare Show your work here Sale Price $500 SP5320 Les Variable Cut (250) Less Variable Cont(0.90) Contribution - 250 Per Unit Como-23 Per SO Carret Correc 2 Contration Margin Ratio: Round to decimal places Alternative 150% Alternative 2.71875 Show your work here Corbution 100 140.625/281.250 100 05900 - 50% 718255 Show your word. Bere Cornuti100 246,400/34.900 100 0.73850 100 71.875% Break-Even Point in UNITS Core Correct 26.92 show you work here Fixed Cost Contribution Perut 74.990/250 -2.2 Un 78000 Show your won here Fred Cost Contribution Per Unt 179.400/230 - 76.900 Amatve 1- 29.99 Alamat 2 78.000 U Broak Even Point in Sales DOLLARS Correct Connect 2 Alternative 1 + $0.00 Alimativ 2-5249.000 Show your work here Show your order Brok Events Sale PricePerUs Break Even Units Sile PricePerU 20.9925 78.000 3.20 $149.96000 Correct Correct 390090400 Show your won here For Conto Contribution Marginate Sales Dots needed to 530990000 target income of $80,000 (558,080 net Show your work here 28 Pastoon Pound to nearest doli (NO DECIMALS) Contrtuson Margin to Alternative 130990 Alternative 2.5360904 6132 Correct correct 1 Fired Cost Togetheme Contribution Per Unit Sales UNITS neded to em target Income of $40.000 556.090 nell) 2 "Rund to newest whole unult (no decimal Allomave 15.062 Units Allemate 2-112783 Units 11270 Show your work here Fixed Ceste Tugit income Contribution Perunt 170.0180.000 74080 + 60.000 61.902 Unit 112.788 Ureta 025 DS 0.25 CVP Income Statement to prove income Aple Variable Carbuton Ma F Operating in rooms tine $300.560.00 $154,100.00 $154,900.00 57490.00 330.000.00 $24.000.00 516000 DO $360 000 S101504.00 525 400.00 1179400.00 500.000.00 524 000.00 Core Correct Contact Contact Correct correct Correct Connect Correct Correct Correct Connect Correct correct 025 0.25 Alternative 1 - Bakery Alternative Z-Drive-Inru ALT 2 0.5 Correct Correct Correct Correct 0.5 CVP Income Statement - Sales decline 20% 6pts Variable C Contribution Ma Fixed C Operating Ince Income Ta Net Inc CVP Income Statement - Sales increase 20 0.25 $225,000.00 $112,500.00 $112,500.00 $74.980.00 $37,520.00 $11.256.00 $26,264.00 $276.480.00 $77,760.00 $198.720.00 $179,400.00 0.5 Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct $19,320.00 $5.796.00 $13,524.00 0.25 0.5 0.5 Spts 0.5 0.5 0.25 $337,500.00 $168.750.00 $168,750.00 $74.980.00 $93.770.00 $28,131.00 $65,639.00 Variable Contribution Ma Fixed C Operating Inci Income Te Net Inc $414.720.00 $116,640.00 $298,080.00 $179.400.00 $118.680.00 $35,604.00 Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct correct Correct correct 0.5 0.25 0.5 $83,076.00 0.5 Correct Correct 1 Profit Margin 2 pts Round percentage to 2 decimal places le 12.15% You must put % sign 16.34% Show your work here: Net Income / Sales 100 45,952 / 281,250 100 0.1634 100 16.34% 13.98% Show your work here: Net Income / Sales. 100 48,300 / 345,600 100 0.1398 100 13.98% Correct Correct 1 Return on Assets 2 pts Round percentage to 2 decimal places i.e. 12.15% You must put % sign 15.32% Show your work here: Net Profit/ Average Assets 45,952/300,000 15.32% 12.08% Show your work here: Net Profit/ Average Assets 48,300 / 400,000 12.08% B) Summary Report - Comparing your calculations from alternative 1 and alternative 2 which alternative do you recommend to Nathan and Cody? Why? The company can only pick one of the alternatives, due to the time and resources involved, so you will need to make a compelling case to support your decision. Be sure to identify any assumptions used in your analysis. If you use any outside sources, be sure to include cite the resource Your summary report will need to state your choice for either alternative 1 OR 2 and include substantive support for your recommendation. The report needs to be typed and be at least 4 paragraphs, and must include financial analysis ACCT 102 Case Project Classic Coffee Company Best friends, Nathan and Cody, decided to start their own business which would bring great coffee from all over the world to their local community. Together they have formed Classic Coffee Company, or CCC (assume their coffee shop is located a few miles from our college campus). Nathan is selecting and making the coffee they serve. Cody manages the front and back office; selling coffee to customers, paying employees, and running ads for the coffee shop. Last year, the company sold 45,000 units and had the below sales and cost figures. Sales $135,000.00 Variable Costs $ 40,500.00 Contribution Margin $ 94,500.00 Fixed Costs $ 49.980.00 Income Before Taxes $ 44.520.00 Income Tax $ 13,356.00 Net Income $ 31.164.00 The team have been in business for a year. With competition rising in the coffee industry, they know that another challenging and competitive year lies ahead of them. They are considering two alternatives and have hired you to help them make some important business decisions. Classic Coffee Company Alternative 1- Bakery Facing stiff competition from other coffee and beverage shops, Classic Coffee Company (CCC) is considering expanding its products to include bakery items. CCC would now experience higher average sales amounts per customer since beverage sales may be accompanied with food sales. This would, however, increase the company's variable costs since it would need to purchase the food items from outside vendors. The following data pertains to adding the bakery option: Total sales in the number of units would increase 25% with the added bakery option. The average sales price per unit would increase from the current $3.00 to $5.00 when food sales are added to the coffee shop. The variable cost per unit would increase to $2.50 per unit to account for the added cost of bakery items. . There would be an increase in fixed costs of $25,000 for advertising to inform the public of this change. Alternative 2 - Drive Thru CCC is thinking about having a drive-thru installed. Having this amenity would help the coffee shop increase its customer base, allowing them to reach a greater number of customers. This added convenience would permit CCC to slightly increase the price of its average coffee and would not increase the per unit variable costs for the company. The following data pertains to adding the drive-thru option: This alternative is exclusive of alternative 1 Total sales in the number of units would increase by 140% from last year. The construction of the drive-thru would increase fixed costs by $129,420 - which represents one- time construction and installation costs. . This alternative would allow CCC to increase their average sales price to $3.20 a cup of coffee and their variable cost per unit would remain the same at $0.90 per unit. ALT 1 ALT 2 Correct correct Contribution Margin. Total aps Alternative 1. Bakery 180 6.25 Show your work here 342505 -20.350 Les Viriate Cout 56.250 25 (140 525 Contribution Marine 140.625 Alternative 2 - Drive-Thru 24 Show your work 100.000 3.20 345.600 Les Verte Cost 105.000 0.007200) Canirbution Mari-248.400 Allomave 1 140,625 Alternative 224.400 239 Correct correct 2 Contribution Margin-Per Unit 4 pts Alternate 12.50 Per Unit Alternative 22.30 Per Unit 2501 Show your work hare Show your work here Sale Price $500 SP5320 Les Variable Cut (250) Less Variable Cont(0.90) Contribution - 250 Per Unit Como-23 Per SO Carret Correc 2 Contration Margin Ratio: Round to decimal places Alternative 150% Alternative 2.71875 Show your work here Corbution 100 140.625/281.250 100 05900 - 50% 718255 Show your word. Bere Cornuti100 246,400/34.900 100 0.73850 100 71.875% Break-Even Point in UNITS Core Correct 26.92 show you work here Fixed Cost Contribution Perut 74.990/250 -2.2 Un 78000 Show your won here Fred Cost Contribution Per Unt 179.400/230 - 76.900 Amatve 1- 29.99 Alamat 2 78.000 U Broak Even Point in Sales DOLLARS Correct Connect 2 Alternative 1 + $0.00 Alimativ 2-5249.000 Show your work here Show your order Brok Events Sale PricePerUs Break Even Units Sile PricePerU 20.9925 78.000 3.20 $149.96000 Correct Correct 390090400 Show your won here For Conto Contribution Marginate Sales Dots needed to 530990000 target income of $80,000 (558,080 net Show your work here 28 Pastoon Pound to nearest doli (NO DECIMALS) Contrtuson Margin to Alternative 130990 Alternative 2.5360904 6132 Correct correct 1 Fired Cost Togetheme Contribution Per Unit Sales UNITS neded to em target Income of $40.000 556.090 nell) 2 "Rund to newest whole unult (no decimal Allomave 15.062 Units Allemate 2-112783 Units 11270 Show your work here Fixed Ceste Tugit income Contribution Perunt 170.0180.000 74080 + 60.000 61.902 Unit 112.788 Ureta 025 DS 0.25 CVP Income Statement to prove income Aple Variable Carbuton Ma F Operating in rooms tine $300.560.00 $154,100.00 $154,900.00 57490.00 330.000.00 $24.000.00 516000 DO $360 000 S101504.00 525 400.00 1179400.00 500.000.00 524 000.00 Core Correct Contact Contact Correct correct Correct Connect Correct Correct Correct Connect Correct correct 025 0.25 Alternative 1 - Bakery Alternative Z-Drive-Inru ALT 2 0.5 Correct Correct Correct Correct 0.5 CVP Income Statement - Sales decline 20% 6pts Variable C Contribution Ma Fixed C Operating Ince Income Ta Net Inc CVP Income Statement - Sales increase 20 0.25 $225,000.00 $112,500.00 $112,500.00 $74.980.00 $37,520.00 $11.256.00 $26,264.00 $276.480.00 $77,760.00 $198.720.00 $179,400.00 0.5 Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct $19,320.00 $5.796.00 $13,524.00 0.25 0.5 0.5 Spts 0.5 0.5 0.25 $337,500.00 $168.750.00 $168,750.00 $74.980.00 $93.770.00 $28,131.00 $65,639.00 Variable Contribution Ma Fixed C Operating Inci Income Te Net Inc $414.720.00 $116,640.00 $298,080.00 $179.400.00 $118.680.00 $35,604.00 Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct Correct correct Correct correct 0.5 0.25 0.5 $83,076.00 0.5 Correct Correct 1 Profit Margin 2 pts Round percentage to 2 decimal places le 12.15% You must put % sign 16.34% Show your work here: Net Income / Sales 100 45,952 / 281,250 100 0.1634 100 16.34% 13.98% Show your work here: Net Income / Sales. 100 48,300 / 345,600 100 0.1398 100 13.98% Correct Correct 1 Return on Assets 2 pts Round percentage to 2 decimal places i.e. 12.15% You must put % sign 15.32% Show your work here: Net Profit/ Average Assets 45,952/300,000 15.32% 12.08% Show your work here: Net Profit/ Average Assets 48,300 / 400,000 12.08% B) Summary Report - Comparing your calculations from alternative 1 and alternative 2 which alternative do you recommend to Nathan and Cody? Why? The company can only pick one of the alternatives, due to the time and resources involved, so you will need to make a compelling case to support your decision. Be sure to identify any assumptions used in your analysis. If you use any outside sources, be sure to include cite the resource Your summary report will need to state your choice for either alternative 1 OR 2 and include substantive support for your recommendation. The report needs to be typed and be at least 4 paragraphs, and must include financial analysis