...oo Verizon LTE 4:21 PM coker.blackboard.com 1 of 4 ents: 1) Give your company an attractive...

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...oo Verizon LTE 4:21 PM coker.blackboard.com 1 of 4 ents: 1) Give your company an attractive name. 2) What and how much of your costs are variable costs? List your manufacturing and non- manufacturing variable cost items and present each of them in cost per T-shirt basis. 86% 3) What and how much of your costs are fixed costs? List your manufacturing and non- manufacturing fixed cost items and present each of them in total cost per year. 4) Write out your yearly cost formula in Y = a +bX format. Be sure to include both manufacturing costs and non-manufacturing costs in the cost formula. 5) Assume that you make and sell 8,800 t-shirts in the first year. Use your cost formula to calculate your first year's total cost. If you sell these t-shirts at $18 each, how much would net profit be in the first year? Now you have developed your cost estimates, let's do some evaluations on this proposed business. a. Continue to assume that 8,800 t-shirts will be made and sold in the first year. What is your product cost per unit under absorption costing? What is your product cost per unit under variable costing? b. Based on the estimated sales level of 8,800 t-shirts for the first year, prepare your company's (forecasted) income statement for the year ended on 07/31/2018 using both (1) the traditional format based on the absorption costing and (2) the contribution format based on the variable costing. c. Calculate contribution margin per T-shirt and contribution margin ratio. d. Calculate how many T-shirts you need to sell in order to break-even. Calculate how much sales in dollars you need to make in order to break-even. (Use break- even formulas.) e. Calculate how many T-shirts you need to sell in order to make $14,000 target profit for the year. f. Continue to assume that 8,800 T-shirts will be made and sold during the first year. Calculate your (1) margin of safety and (2) degree of operating leverage (DOL) for your business. What do these figures tell you about how risky your business is? g. If sales could increase by 1,760 shirts (i.e. a 20% increase), by how much in dollars would net operating income increase? By what percentage would net operating income increase? (Use the "quick" way, i.e. contribution margin concept and DOL you have learned in class to answer these questions. Do not recalculate net operating income.) > ...oo Verizon LTE 2 of 4 4:21 PM coker.blackboard.com 86% h. Prepare a contribution format income statement assuming a sales increase by 20% to 10,560 shirts. Compare your new net operating income with your answer in Question "b" and prove mathematically that your answers to the two questions in Question "g" are correct. i. Ignore Questions "g" and "h". If the cost per plain t-shirt is expected to increase by 15% and sales (in number of T-shirts) are expected to be 5% less, how much is your projected net operating income (or loss)? j. Continue Question "i". If the only expense you can cut is the salary paid to yourselves, how much salary should you cut in order to break even? k. Ignore Question "i" and "j". Assume that you have produced 8,800 t-shirts, but the actual sales for the first year turn out to be 8,200 T-shirts instead of 8,800. Le. you will have 600 T-shirts left at the end of the first year. Prepare (1) a traditional format income statement and (2) a contribution format income statement. Are the two net operating income figures the same? Why or why not? 1. Continue "k". At what amount would inventory be reported in the balance sheet of 07/31/2018 under (1) the absorption costing and (2) variable costing? Are the two ending inventory figures the same or different? Why? 7) Calculate the total amount of cash you will need to have before the launching day of your business, in order to buy all necessary equipment and machines, to purchase all materials and supplies needed for the first three months' operations, and to pay your employees' first three months salaries. Assume that your parents have agreed to loan you this amount, interest free. The following is information regarding the cash payment needs for your variable costs and fixed costs: a. Variable Costs and Expenses: For every variable cost item, you decide to buy sufficient quantity for making the first 2,300 T-shirts. You also want to prepare sufficient amount of cash to pay for the labor costs needed for making, folding, and wrapping the first 2,300 T-shirts. Assume that you can pay your workers for a fraction of an hour. However, you cannot purchase a fraction of an ink-jet cartridge or a partial case or ream of paper. b. Fixed Costs and Expenses: In addition to covering variable costs for the first 2,300 T-shirts, your initial amount of cash should be sufficient to pay for the first quarter's cash needs for your fixed costs. For your fixed cost items, payments will be made according to the following pattern: (Note: The following cost item labels are according to the cost list of requirement #3.) . Cost items 1), 3), and 9) will be paid on a monthly basis. . Cost items 4), 5a), and Sb) will be completely paid for on January 1". The first quarterly party, cost item 10), will be paid at the end of the first quarter. • • Cost item 8) will not be paid until the end of the first year of operations. ...oo Verizon LTE 4:21 PM coker.blackboard.com 86% 3 of 4 8) Prepare a cash budget for your company's first year of operations. (NOT the first three months or the first 2,300 T-shirts!) Continue to assume that the selling price is $18 and that 8,800 t-shirts will be made and sold in the first year. Assume all sales are cash sales and that all costs and expenses are paid in cash. Prepare cash budget for the entire year, do not separate the budget into four quarters. Your initial cash balance is the amount you reported in Item 2 above. You decide to keep a cash balance of $20,000 at July 31, 2018 and use the extra cash, if there is, to pay back part of the loan you borrowed from your parents. 9) Calculate the first year's estimated "Simple Rate of Retum" (i.e. accounting rate of return) of your business. Use the net income under the absorption costing. For simplicity, use the amount of money you originally borrowed from your parents as the amount of "initial investment" for this calculation. 10) After reviewing the budgeted income statement and the simple rate of return for your company's first year of operations, you and your partners are disappointed at the low estimated net income (net loss) and rate of return. So, you begin to discuss business strategies that you hope will help to improve profitability. a. Develop a business strategy which will involve at least three changes in some (or all) of the following attributes: (1) variable cost per t-shirt, (2) total fixed cost, and (3) selling price per T-shirt. Your three (or more) changes can come in any combination of (1), (2), and (3). For instance, you could propose that you use better quality plain t-shirts as raw material (which will change (1)), increase advertising budget (which will change (2)), and then sell the t-shirts at a higher price (which will change (3)), and hope that you will be able to sell more T-shirts after adopting this strategy. Alternatively, your business strategy could be to draw the T-shirt pictures yourself instead of using the artist (which will change (2)), move your business location to a less expensive location (which will also change (2)), and lower the price (which will change (3)). Please use your imagination to come up with a more creative strategy than proposed here! (Innovative strategies will receive extra points.) Describe your strategy clearly and justify why you believe your strategy will work. b. Indicate by how much your variable cost per T-shirt, total fixed cost, and selling price will change under your strategy. Revise your overall cost formula (requirement #4.) according to your strategy. c. What would the new contribution margin per T-shirt be? What would the new break-even level of annual sales (in number of T-shirts) be under your strategy? d. Under your strategy, how many T-shirts do you think you will be able to produce/sell in a year in the best (but realistic) scenario? How many T-shirts do you think you can produce/sell in the worst scenario? Assume that the T-shirts produced will be all sold. Calculate your net income under each of the two scenarios. (Note: Calculating net operating income would be easier using the variable costing approach. Do not hesitate to give realistic estimations. Your report ...oo Verizon LTE 4:21 PM coker.blackboard.com 86% c. What would the new contribution margin per T-shirt be? What would the new even level of annual sales (in number of T-shirts) be under your strategy? 4 of 4 your strategy, how many T-shirts do you think you will be able to ptice/sell in a year in the best (but realistic) scenario? How many T-shirts do you think you can produce/sell in the worst scenario? Assume that the T-shirts produced will be all sold. Calculate your net income under each of the two scenarios. (Note: Calculating net operating income would be easier using the variable costing approach. Do not hesitate to give realistic estimations. Your report grades will have nothing to do with the profitability of your business.) 11) After your thorough analyses of costs, sales, and profitability of your T-shirt business throughout the requirements of this group project, what is your overall impression of the future potential of this business? Please provide a short one-paragraph assessment. ●●● Verizon LTE 1 of 10 List your group member's names: 0 1) Your company's name: 2) Variable Costs - Manufacturing and Non-manufacturing Manufacturing O 0 4:21 PM coker.blackboard.com Cost Item BA 213-Spring 2017 Group Project Total variable manufacturing cost per T-shirt Non-manufacturing Cost Item Total variable non-manufacturing cost per T-shirt Total variable cost per T-shirt Cast Ham Cost per T-shirt Cost per T-shirt BA 213-Spring 2017 Group Project 3) Fixed Costs - Manufacturing and Non-manufacturing Manufacturing Cost no I shirt 86% ...oo Verizon LTE 2 of 10 BA 213-Spring 2017 Group Project 3) Fixed Costs - Manufacturing and Non-manufacturing Manufacturing 。 O 。 O 。 Cost Item 4:21 PM coker.blackboard.com Total variable manufacturing cost per T-shirt Non-manufacturing Cost Item Total variable non-manufacturing cost per T-shirt Total variable cost per T-shirt 4) Cost formula for manufacturing costs: Cost formula for non-manufacturing costs: Cost formula for the T-shirt business: (present each cost formula in "Y = a +bX" format) Cost per T-shirt Cost per T-shirt BA 213-Spring 2017 Group Project 5) If for the first year, sales 8,800 T-shirts, and selling price is $18 per T-shirt: Total costs Net Profit ch 6) Business Evaluation: a) Product cost per T-shirt under absorption costing: 86% ...oo Verizon LTE 3 of 10 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project 5) If for the first year, sales = 8,800 T-shirts, and selling price is $18 per T-shirt: Total costs= Net Profit 6) Business Evaluation: a) Product cost per T-shirt under absorption costing: Product cost per T-shirt under variable costing: b) Income Statements (no need to list each cost expense separately) Income Statement (Absorption Costing) For Year Ended 7/31/2018 Sales Less: Cost of Goods Sold Gross Margin Less: Selling and Administrative Expenses Net Operating Profit BA 213-Spring 2017 Group Project Income Statement (Variable Costing) For Year Ended 7/31/2018 86% ...oo Verizon LTE 4 of 10 Sales Less: Variable Costs Contribution Margin Less: Fixed Costs Net Operating Income 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project Income Statement (Variable Costing) For Year Ended 7/31/2018 c) Contribution Margin per T-shirt Contribution Margin Ratio d) Break-even number of T-shirts per year Break-even sales in dollars per year e) T-shirts needed to earn $14,00 target profit f) Margin of safety Degree of operating leverage What are we told about the riskiness of the business based on these 2 numbers? BA 213-Spring 2017 Group Project 86% g) Dollar increase in net operating income Percentage increase in Net operating income ...oo Verizon LTE 5 of 10 Sales Less: Variable Costs g) Dollar increase in net operating income Percentage increase in Net operating income h) Contribution Margin Income Statement Contribution Margin Less: Fixed Costs Net Operating Income 4:21 PM coker.blackboard.com BA 213 - Spring 2017 Group Project Sales Income Statement (Variable Costing) For Year Ended 7/31/2018 Net operating income when sales are 8,800 units Dollar increase in net operating income Percentage increase in net operating income i) Projected net operating income (or loss) i) To break-even, administrative salary should be BA 213-Spring 2017 Group Project k) Income Statements (no need to list each cost/expense separately) Income Statement (Absorption Costing) For Year Ended 7/31/2018 86% ...oo Verizon LTE 6 of 10 BA 213-Spring 2017 Group Project k) Income Statements (no need to list each cost expense separately) Sales Less: Variable Costs 4:21 PM coker.blackboard.com Sales Less: Cost of Goods Sold Gross Margin Less: Selling and Administrative Expenses Net Operating Profit Contribution Margin Less: Fixed Costs Net Operating Income Income Statement (Absorption Costing) For Year Ended 7/31/2018 Income Statement (Variable Costing) For Year Ended 7/31/2018 Are the two net operating income figures the same or different? Why? BA 213-Spring 2017 Group Project 1) Inventory value under absorption costing Inventory value under variable costing Are the two ending inventory figures the same or different? Why? 86% ...oo Verizon LTE 7 of 10 0 7) Total amount of cash needed on August 1, 2017 O Cash needed for variable cost of 2,300 T-shirts Cost Item 0 。 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project O 1) Inventory value under absorption costing Inventory value under variable costing Are the two ending inventory figures the same or different? Why? O Cash needed for fixed costs for 1 quarter Cost Item Total cash needed for variable costs Cash Needed Cash Needed BA 213-Spring 2017 Group Project 86% ...oo Verizon LTE 8 of 10 O O 0 Total cash needed for fixed costs 8) Cash budget for the first year ended July 31, 2018 4:21 PM coker.blackboard.com Cash balance, August 1, 2017 Collections from customers Less disbursements: BA 213-Spring 2017 Group Project Total cash available before disbursements Excess of cash Financing Total disbursements Repayment Cash Budget For Year Ended 7/31/2018 BA 213-Spring 2017 Group Project Cash balance, July 31, 2018 9) Simple rate of return 10) Your business strategy 86% ...oo Verizon LTE TURO URDUUR GOTTIT Excess of cash 9 of 10 ment 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project Cash balance, July 31, 2018 9) Simple rate of return 10) Your business strategy Describe your business strategy in detain and explain why you think it will work. BA 213-Spring 2017 Group Project 86% Original overall cost formula ...oo Verizon LTE 4:21 PM coker.blackboard.com 10 of 10 BA 213-Spring 2017 Group Project Original overall cost formula The impact of your strategy: Original Variable cost per unit Total fixed cost Selling price New overall cost formula New contribution margin per T-shirt New Break-even sales Amount of change (+ or -) Sales (in number of T-shirts) in the best scenario Net Income Sales (in number of T-shirts) in the worst scenario Net Income 11) Assessment of the business's future potential 86% After Change C ...oo Verizon LTE 4:21 PM coker.blackboard.com 1 of 4 ents: 1) Give your company an attractive name. 2) What and how much of your costs are variable costs? List your manufacturing and non- manufacturing variable cost items and present each of them in cost per T-shirt basis. 86% 3) What and how much of your costs are fixed costs? List your manufacturing and non- manufacturing fixed cost items and present each of them in total cost per year. 4) Write out your yearly cost formula in Y = a +bX format. Be sure to include both manufacturing costs and non-manufacturing costs in the cost formula. 5) Assume that you make and sell 8,800 t-shirts in the first year. Use your cost formula to calculate your first year's total cost. If you sell these t-shirts at $18 each, how much would net profit be in the first year? Now you have developed your cost estimates, let's do some evaluations on this proposed business. a. Continue to assume that 8,800 t-shirts will be made and sold in the first year. What is your product cost per unit under absorption costing? What is your product cost per unit under variable costing? b. Based on the estimated sales level of 8,800 t-shirts for the first year, prepare your company's (forecasted) income statement for the year ended on 07/31/2018 using both (1) the traditional format based on the absorption costing and (2) the contribution format based on the variable costing. c. Calculate contribution margin per T-shirt and contribution margin ratio. d. Calculate how many T-shirts you need to sell in order to break-even. Calculate how much sales in dollars you need to make in order to break-even. (Use break- even formulas.) e. Calculate how many T-shirts you need to sell in order to make $14,000 target profit for the year. f. Continue to assume that 8,800 T-shirts will be made and sold during the first year. Calculate your (1) margin of safety and (2) degree of operating leverage (DOL) for your business. What do these figures tell you about how risky your business is? g. If sales could increase by 1,760 shirts (i.e. a 20% increase), by how much in dollars would net operating income increase? By what percentage would net operating income increase? (Use the "quick" way, i.e. contribution margin concept and DOL you have learned in class to answer these questions. Do not recalculate net operating income.) > ...oo Verizon LTE 2 of 4 4:21 PM coker.blackboard.com 86% h. Prepare a contribution format income statement assuming a sales increase by 20% to 10,560 shirts. Compare your new net operating income with your answer in Question "b" and prove mathematically that your answers to the two questions in Question "g" are correct. i. Ignore Questions "g" and "h". If the cost per plain t-shirt is expected to increase by 15% and sales (in number of T-shirts) are expected to be 5% less, how much is your projected net operating income (or loss)? j. Continue Question "i". If the only expense you can cut is the salary paid to yourselves, how much salary should you cut in order to break even? k. Ignore Question "i" and "j". Assume that you have produced 8,800 t-shirts, but the actual sales for the first year turn out to be 8,200 T-shirts instead of 8,800. Le. you will have 600 T-shirts left at the end of the first year. Prepare (1) a traditional format income statement and (2) a contribution format income statement. Are the two net operating income figures the same? Why or why not? 1. Continue "k". At what amount would inventory be reported in the balance sheet of 07/31/2018 under (1) the absorption costing and (2) variable costing? Are the two ending inventory figures the same or different? Why? 7) Calculate the total amount of cash you will need to have before the launching day of your business, in order to buy all necessary equipment and machines, to purchase all materials and supplies needed for the first three months' operations, and to pay your employees' first three months salaries. Assume that your parents have agreed to loan you this amount, interest free. The following is information regarding the cash payment needs for your variable costs and fixed costs: a. Variable Costs and Expenses: For every variable cost item, you decide to buy sufficient quantity for making the first 2,300 T-shirts. You also want to prepare sufficient amount of cash to pay for the labor costs needed for making, folding, and wrapping the first 2,300 T-shirts. Assume that you can pay your workers for a fraction of an hour. However, you cannot purchase a fraction of an ink-jet cartridge or a partial case or ream of paper. b. Fixed Costs and Expenses: In addition to covering variable costs for the first 2,300 T-shirts, your initial amount of cash should be sufficient to pay for the first quarter's cash needs for your fixed costs. For your fixed cost items, payments will be made according to the following pattern: (Note: The following cost item labels are according to the cost list of requirement #3.) . Cost items 1), 3), and 9) will be paid on a monthly basis. . Cost items 4), 5a), and Sb) will be completely paid for on January 1". The first quarterly party, cost item 10), will be paid at the end of the first quarter. • • Cost item 8) will not be paid until the end of the first year of operations. ...oo Verizon LTE 4:21 PM coker.blackboard.com 86% 3 of 4 8) Prepare a cash budget for your company's first year of operations. (NOT the first three months or the first 2,300 T-shirts!) Continue to assume that the selling price is $18 and that 8,800 t-shirts will be made and sold in the first year. Assume all sales are cash sales and that all costs and expenses are paid in cash. Prepare cash budget for the entire year, do not separate the budget into four quarters. Your initial cash balance is the amount you reported in Item 2 above. You decide to keep a cash balance of $20,000 at July 31, 2018 and use the extra cash, if there is, to pay back part of the loan you borrowed from your parents. 9) Calculate the first year's estimated "Simple Rate of Retum" (i.e. accounting rate of return) of your business. Use the net income under the absorption costing. For simplicity, use the amount of money you originally borrowed from your parents as the amount of "initial investment" for this calculation. 10) After reviewing the budgeted income statement and the simple rate of return for your company's first year of operations, you and your partners are disappointed at the low estimated net income (net loss) and rate of return. So, you begin to discuss business strategies that you hope will help to improve profitability. a. Develop a business strategy which will involve at least three changes in some (or all) of the following attributes: (1) variable cost per t-shirt, (2) total fixed cost, and (3) selling price per T-shirt. Your three (or more) changes can come in any combination of (1), (2), and (3). For instance, you could propose that you use better quality plain t-shirts as raw material (which will change (1)), increase advertising budget (which will change (2)), and then sell the t-shirts at a higher price (which will change (3)), and hope that you will be able to sell more T-shirts after adopting this strategy. Alternatively, your business strategy could be to draw the T-shirt pictures yourself instead of using the artist (which will change (2)), move your business location to a less expensive location (which will also change (2)), and lower the price (which will change (3)). Please use your imagination to come up with a more creative strategy than proposed here! (Innovative strategies will receive extra points.) Describe your strategy clearly and justify why you believe your strategy will work. b. Indicate by how much your variable cost per T-shirt, total fixed cost, and selling price will change under your strategy. Revise your overall cost formula (requirement #4.) according to your strategy. c. What would the new contribution margin per T-shirt be? What would the new break-even level of annual sales (in number of T-shirts) be under your strategy? d. Under your strategy, how many T-shirts do you think you will be able to produce/sell in a year in the best (but realistic) scenario? How many T-shirts do you think you can produce/sell in the worst scenario? Assume that the T-shirts produced will be all sold. Calculate your net income under each of the two scenarios. (Note: Calculating net operating income would be easier using the variable costing approach. Do not hesitate to give realistic estimations. Your report ...oo Verizon LTE 4:21 PM coker.blackboard.com 86% c. What would the new contribution margin per T-shirt be? What would the new even level of annual sales (in number of T-shirts) be under your strategy? 4 of 4 your strategy, how many T-shirts do you think you will be able to ptice/sell in a year in the best (but realistic) scenario? How many T-shirts do you think you can produce/sell in the worst scenario? Assume that the T-shirts produced will be all sold. Calculate your net income under each of the two scenarios. (Note: Calculating net operating income would be easier using the variable costing approach. Do not hesitate to give realistic estimations. Your report grades will have nothing to do with the profitability of your business.) 11) After your thorough analyses of costs, sales, and profitability of your T-shirt business throughout the requirements of this group project, what is your overall impression of the future potential of this business? Please provide a short one-paragraph assessment. ●●● Verizon LTE 1 of 10 List your group member's names: 0 1) Your company's name: 2) Variable Costs - Manufacturing and Non-manufacturing Manufacturing O 0 4:21 PM coker.blackboard.com Cost Item BA 213-Spring 2017 Group Project Total variable manufacturing cost per T-shirt Non-manufacturing Cost Item Total variable non-manufacturing cost per T-shirt Total variable cost per T-shirt Cast Ham Cost per T-shirt Cost per T-shirt BA 213-Spring 2017 Group Project 3) Fixed Costs - Manufacturing and Non-manufacturing Manufacturing Cost no I shirt 86% ...oo Verizon LTE 2 of 10 BA 213-Spring 2017 Group Project 3) Fixed Costs - Manufacturing and Non-manufacturing Manufacturing 。 O 。 O 。 Cost Item 4:21 PM coker.blackboard.com Total variable manufacturing cost per T-shirt Non-manufacturing Cost Item Total variable non-manufacturing cost per T-shirt Total variable cost per T-shirt 4) Cost formula for manufacturing costs: Cost formula for non-manufacturing costs: Cost formula for the T-shirt business: (present each cost formula in "Y = a +bX" format) Cost per T-shirt Cost per T-shirt BA 213-Spring 2017 Group Project 5) If for the first year, sales 8,800 T-shirts, and selling price is $18 per T-shirt: Total costs Net Profit ch 6) Business Evaluation: a) Product cost per T-shirt under absorption costing: 86% ...oo Verizon LTE 3 of 10 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project 5) If for the first year, sales = 8,800 T-shirts, and selling price is $18 per T-shirt: Total costs= Net Profit 6) Business Evaluation: a) Product cost per T-shirt under absorption costing: Product cost per T-shirt under variable costing: b) Income Statements (no need to list each cost expense separately) Income Statement (Absorption Costing) For Year Ended 7/31/2018 Sales Less: Cost of Goods Sold Gross Margin Less: Selling and Administrative Expenses Net Operating Profit BA 213-Spring 2017 Group Project Income Statement (Variable Costing) For Year Ended 7/31/2018 86% ...oo Verizon LTE 4 of 10 Sales Less: Variable Costs Contribution Margin Less: Fixed Costs Net Operating Income 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project Income Statement (Variable Costing) For Year Ended 7/31/2018 c) Contribution Margin per T-shirt Contribution Margin Ratio d) Break-even number of T-shirts per year Break-even sales in dollars per year e) T-shirts needed to earn $14,00 target profit f) Margin of safety Degree of operating leverage What are we told about the riskiness of the business based on these 2 numbers? BA 213-Spring 2017 Group Project 86% g) Dollar increase in net operating income Percentage increase in Net operating income ...oo Verizon LTE 5 of 10 Sales Less: Variable Costs g) Dollar increase in net operating income Percentage increase in Net operating income h) Contribution Margin Income Statement Contribution Margin Less: Fixed Costs Net Operating Income 4:21 PM coker.blackboard.com BA 213 - Spring 2017 Group Project Sales Income Statement (Variable Costing) For Year Ended 7/31/2018 Net operating income when sales are 8,800 units Dollar increase in net operating income Percentage increase in net operating income i) Projected net operating income (or loss) i) To break-even, administrative salary should be BA 213-Spring 2017 Group Project k) Income Statements (no need to list each cost/expense separately) Income Statement (Absorption Costing) For Year Ended 7/31/2018 86% ...oo Verizon LTE 6 of 10 BA 213-Spring 2017 Group Project k) Income Statements (no need to list each cost expense separately) Sales Less: Variable Costs 4:21 PM coker.blackboard.com Sales Less: Cost of Goods Sold Gross Margin Less: Selling and Administrative Expenses Net Operating Profit Contribution Margin Less: Fixed Costs Net Operating Income Income Statement (Absorption Costing) For Year Ended 7/31/2018 Income Statement (Variable Costing) For Year Ended 7/31/2018 Are the two net operating income figures the same or different? Why? BA 213-Spring 2017 Group Project 1) Inventory value under absorption costing Inventory value under variable costing Are the two ending inventory figures the same or different? Why? 86% ...oo Verizon LTE 7 of 10 0 7) Total amount of cash needed on August 1, 2017 O Cash needed for variable cost of 2,300 T-shirts Cost Item 0 。 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project O 1) Inventory value under absorption costing Inventory value under variable costing Are the two ending inventory figures the same or different? Why? O Cash needed for fixed costs for 1 quarter Cost Item Total cash needed for variable costs Cash Needed Cash Needed BA 213-Spring 2017 Group Project 86% ...oo Verizon LTE 8 of 10 O O 0 Total cash needed for fixed costs 8) Cash budget for the first year ended July 31, 2018 4:21 PM coker.blackboard.com Cash balance, August 1, 2017 Collections from customers Less disbursements: BA 213-Spring 2017 Group Project Total cash available before disbursements Excess of cash Financing Total disbursements Repayment Cash Budget For Year Ended 7/31/2018 BA 213-Spring 2017 Group Project Cash balance, July 31, 2018 9) Simple rate of return 10) Your business strategy 86% ...oo Verizon LTE TURO URDUUR GOTTIT Excess of cash 9 of 10 ment 4:21 PM coker.blackboard.com BA 213-Spring 2017 Group Project Cash balance, July 31, 2018 9) Simple rate of return 10) Your business strategy Describe your business strategy in detain and explain why you think it will work. BA 213-Spring 2017 Group Project 86% Original overall cost formula ...oo Verizon LTE 4:21 PM coker.blackboard.com 10 of 10 BA 213-Spring 2017 Group Project Original overall cost formula The impact of your strategy: Original Variable cost per unit Total fixed cost Selling price New overall cost formula New contribution margin per T-shirt New Break-even sales Amount of change (+ or -) Sales (in number of T-shirts) in the best scenario Net Income Sales (in number of T-shirts) in the worst scenario Net Income 11) Assessment of the business's future potential 86% After Change C