Read the case study: Cat and Joe_ Pig Rig Case Study_Should We Stay or Should We Go-1.pdfDownload Cat and Joe_ Pig Rig Case Study_Should We Stay or Should We Go-1.pdf

In this assignment , you will use cost-volume-profit analysis to make business decisions for a small business.

Instructions: (Let me know via email who is submitting the group's case)

• You may use any resources including the textbook, AI, and Internet searches to prepare the answers to the questions in the case study.Use this template to organize your answer in ACC 6040
• Prepare the analysis and recommendation for the case study in a MS Word Document. Please do not submit a PDF or a hand-written scanned. Use headings and sub-headingsas opposed to writing "Answer to the question 1, 2...."
• Show your computations and tables clearly.

ACC 6040

Spring 2024

Case Study 2: Advising Cat and Joe, a small business owner, on accepting a special business offer

Prepared for:

Prepared by:

1. Advantages and disadvantages inherent to the food truck business model as compared to traditional restaurants:

Advantages:

Disadvantages:

2.a. Breakeven sales in unit in Kamloops on a typical day:

Breakeven in unit = Fixed costs/Contribution margin per unit
Selling price per unit (SP/U):
Variable costs per unit (VC/U): 40% of sales revenue:
Contribution margin per unit (CMU): SP/ U - VC /U
Fixed costs (FC) per year:
Number of operational days:
Fixed costs per day:
Breakeven sales in unit per day:

2.b. Relevance of Cat and Joe's breakeven point to the entrepreneurs:

2.c. Number of daily required sales units (sandwiches) to make an after-tax profit of $100,000 for the year in Kamloops:

Required sales unit = (Fixed costs + Target profit)/CMU
Contribution margin per unit
Fixed costs per year
After-tax target profit
Tax rate
Before-tax profit
Required sales unit per year
Required sales unit per day

1. Contribution-format income statement for one day's business at the Pig Rig based on optimistic, realistic, and pessimistic projections:

Pig-Rig
contribution-format income statement
Scenarios	Optimistic	Realistic	Pessimistic
Number of servings
Sales
Variable costs
Contribution margin
Fixed costs
Profit before tax
Income tax
Profit after tax

1. Contribution-format income statement for the Bullarama event based on an optimistic projection (no onsite competitors), a conservative projection (one onsite competitor), and a pessimistic projection (two onsite competitors).

Bullarama: Number of attendees
Optimistic (no other vendor: ...... ):
Conservative (one more vendor: ...... ):
Pessimistic (two more vendors: ........ ):
Selling price per unit
Variable costs per unit: ........
Contribution margin per unit
Fixed costs for the day: .........

Bullarama
contribution-format income statement
Scenarios	Optimistic	Conservative	Pessimistic
Number of customers
Sales
Variable costs
Contribution margin
Fixed costs
Profit before tax
Income tax
Profit after tax

1. Nonfinancial advantages and disadvantages of attending Bullarama:

Advantages:

Disadvantages:

1. Recommending Cat and Joe on should they stay in Kamloops or accept the Bullarama event offer assuming there will be one onsite competitor:

Profit scenario forKamloops vs Bullarama:

	Optimistic	Conservative	Pessimistic
Kamloops: Profit after tax
Bullarama: Profit after tax

Based on the profit scenario, we recommend that................................................................. ...................................................................................................................................................Because, ................................................................................................................................... ................................................................................................................................................... However, there are non-financial.............................................................................................

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