Brittney$$s Boutique Case Requirements

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$**$ Use Excel on all parts except question #$6$

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Contribution margin format income statement: I have provided you with a completed contribution margin format income statement for each month from November$-$January and the total for the first $3$ months $($i$.$e$.,$ the total for her first quarter of operations$).$ Use it to help you with the remaining requirements.

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$1.$ Cost$-$volume$-$profit $($CVP$)$ analyses: Calculate and perform the following CVP analyses.$$ Use the total numbers from the first $3$ months $($i$.$e$.,$ the total numbers for her first quarter of operations$).$

A$.$ Calculate the following CVP model variables for Brittney$$s Boutique

i$.$ Total Variable Cost Percentage $($Hint: Credit Card Processing Fee is a variable cost$).$

ii$.$ Total Contribution Margin Percentage

iii.$$ Total Fixed Cost Dollars

B$.$ Calculate the following:

i$.$ Break$-$even point in sales dollars for the first quarter.$$

ii$.$ Margin of safety in sales dollars for the first quarter.$$

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$2.$ Cash Collections budget:

A$.$ Prepare a schedule of cash collections for each month from November$-$January and the total for her first quarter of operations.

B$.$ What is the Accounts Receivable Balance as of January $31$st$?$

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$3.$ Inventory Purchases budget: Prepare an inventory purchases budget for each month from November$-$January and the total for her first quarter of operations.

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$4.$ Cash Disbursements budget:

A$.$ Prepare a cash payments $($or disbursements$)$ budget for inventory purchases for November$-$January and the total for her first quarter of operations.

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B$.$ What is the Accounts Payable Balance as of January $31$st$?$

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$5.$ Cash budget: Prepare an overall cash budget $($not a Statement of Cash Flows$)$ for November$-$January and the total for her first quarter of operations. Hint: Depreciation & Amortization are non$-$cash expenses, so they won$$t be on this budget.$$ Check figure: Nov. Ending Cash Balance: $$4539\mathrm{.}94$ or $$4674\mathrm{.}94$ depending on how you accounted for the credit card processing fee.

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$6.$ Analysis and recommendations: After preparing Brittney$$s budgets and analyses, what advice would you have Professor Scott give Brittney with managing her business? Contribution Margin Format Income Statement

November December January Quarter

Gross Sales $$30,000\mathrm{.}00$ $$90,000\mathrm{.}00$ $$40,000\mathrm{.}00$ $$160,000\mathrm{.}00$

Less: Credit Card Processing Expense a $270\mathrm{.}00810\mathrm{.}00360\mathrm{.}001,440\mathrm{.}00$

Net Sales $$29,730\mathrm{.}00$ $$89,190\mathrm{.}00$ $$39,640\mathrm{.}00$ $$158,560\mathrm{.}00$

Less: Variable Costs:

Cost of Goods Sold b $14,400\mathrm{.}0043,200\mathrm{.}0019,200\mathrm{.}0076,800\mathrm{.}00$

Contribution Margin $15,330\mathrm{.}0045,990\mathrm{.}0020,440\mathrm{.}0081,760\mathrm{.}00$

Less: Fixed Costs:

Rent Expense $3,000\mathrm{.}003,000\mathrm{.}003,000\mathrm{.}009,000\mathrm{.}00$

Depreciation Expense c

Computer $83\mathrm{.}3383\mathrm{.}3383\mathrm{.}33250\mathrm{.}00$

Furniture & Fixtures $100\mathrm{.}00100\mathrm{.}00100\mathrm{.}00300\mathrm{.}00$

L'hold Imp't Amortization Expense d $150\mathrm{.}00150\mathrm{.}00150\mathrm{.}00450\mathrm{.}00$

Supplies Expense $1,000\mathrm{.}001,000\mathrm{.}001,000\mathrm{.}003,000\mathrm{.}00$

Advertising Expense $2,500\mathrm{.}001,500\mathrm{.}001,000\mathrm{.}005,000\mathrm{.}00$

Utilities Expense e $550\mathrm{.}00550\mathrm{.}00550\mathrm{.}001,650\mathrm{.}00$

Miscellaneous Expense $100\mathrm{.}00100\mathrm{.}00100\mathrm{.}00300\mathrm{.}00$

Interest Expense f $291\mathrm{.}67287\mathrm{.}59283\mathrm{.}49862\mathrm{.}75$

Insurance $700\mathrm{.}00700\mathrm{.}00700\mathrm{.}002,100\mathrm{.}00$

Wages $3,500\mathrm{.}003,500\mathrm{.}003,500\mathrm{.}0010,500\mathrm{.}00$

Total Fixed Costs $11,975\mathrm{.}0010,970\mathrm{.}9310,466\mathrm{.}8333,412\mathrm{.}75$

Net Income $$3,355\mathrm{.}00$ $$35,019\mathrm{.}07$ $$9,973\mathrm{.}17$ $$48,347\mathrm{.}25$

Requirement $1$ Calculation Notes:

a Credit Card Processing Fee Expense $=($Gross Sales $*$ Credit Card Sales $\%)*$ Credit Card Processing Fee $\%$

November December January

Current month's Gross Sales $$30,000\mathrm{.}00$ $$90,000\mathrm{.}00$ $$40,000\mathrm{.}00$

$*$ Credit Sales Percentage $60\mathrm{.}00\%60\mathrm{.}00\%60\mathrm{.}00\%$

Current month's Gross Credit Sales $$18,000\mathrm{.}00$ $$54,000\mathrm{.}00$ $$24,000\mathrm{.}00$

$*$ Credit Card Processing Fee $\%1\mathrm{.}50\%1\mathrm{.}50\%1\mathrm{.}50\%$

Credit Card Processing Fee Expense $$270\mathrm{.}00$ $$810\mathrm{.}00$ $$360\mathrm{.}00$