This assignment is a short case analysis using concepts from this week's coursework around contribution margin and break-even. The case, which comes from the Institute of Management Accountants (IMA) Case Journal, is short. However, there are multiple calculations required to respond to the quiz questions, which are completed in the Excel file included for the case. The Excel file is submitted as part of the last question in the Assignment Check and File submission item.

Download the case study document as well as the Excel template to begin the assignment. You should also review the Snowie's company website -- it is a real company that offers franchise-type business opportunities in the form of kiosks, carts/bus, etc.

To understand the type of business you are evaluating in the case, visit the Potential Earnings area of the company website: Snowie.com

Important -- the Excel file must include formulas in cells where appropriate, not typed-in values. There are a few cells where you may type-in values for use in other formulas. However, in cells where a formula is necessary to calculate a value, like break-even dollars or units, there must be a formula in the Excel file in order to receive a grade. A typed-in value where a formula is needed will receive a grade of zero (0) points for that item.

INTRODUCTION Snowie, owned by Carl and Gordon Rupp, is a company that provides training, equipment, and supplies for operating a shaved ice business. Shaved ice is an ice-based refreshment made by shaving a block of ice into a fluffy, snow-like ice. The product is served in cups with flavored syrups added to the ice. Due to its fine texture, shaved ice absorbs the syrup, making each bite flavorful. Snowie does not sell franchises. It sells a wide array of equipment and supplies, including ice shavers, kiosks, carts, buses, syrups, cups, and other supplies to independent operators. PART 1: COST-VOLUME-PROFIT ANALYSIS FOR A SNOWIE KIOSK Assume that you are evaluating whether to start a Snowie! business. You could operate a shaved ice kiosk at fairs, downtown areas, and other outdoor events. The kiosk is portable with wheels and a hitch. It has plenty of storage place, work area, electrical outlets, lighting, and a water system. The flavored shaved ice, a \"Snowie,\" is normally offered in three sizes. For this case, we are going to assume that only one size is offeredthe large size, 20 oz. The large Snowie sells for US $4.75. See Table for a list of all costs related to a large size Snowie. In this case, use straight-line depreciation with a five- year life and salvage values of zero for both the ice shavers and the flavor station. All monetary amounts in this case are expressed in U.S. dollars. REQUIREMENTS 1. Specify your assumptions about the following items: a. Number of days you anticipate opening the Snowie kiosk per month __8 b. Number of hours you will work (no wages required) perday __2 c. Number of hours you will pay an employee to work in the Snowie kiosk perday __ 8 2. Is the cost of syrup a variable or fixed cost with respect to the number of Snowies sold? What is the cost of syrup per Snowie? (Use four decimal places in your response and all calculations for this question.) 3. Is the cost of the worker attending the kiosk a variable or fixed cost with respect to the number of Snowies sold? What is the cost of the worker's wages per day and per month? 4. What is the total variable cost per Snowie (per cup)? 5. What is the total fixed cost per month to operate the Snowie business? 6. Calculate the number of Snowies that you need to sell each month to break even. 7. How many snow cones must be sold to achieve an operating profit of US $2,200.00 per month (before tax)? 8. Think about the break even and target profit quantities you just calculated. Do you think these quantities are realistic? Discuss and support your answer. Requirements Data Amount Notes 1. Assumptions (set by the instructor for the case): Selling price per large Snowie S 4.75 Per Item a. Number of days you anticipate opening the kiosk per month 8 b. Number of hours you will work (no wages required) per day 2 Ice per Snowie S 0.20 Per Item c. Number of hours you will pay an employee to work in the kiosk per day 8 Spoon straw (need one per Snowie) s 0.02 Per Item Styrofoam cup (need one per Snowie) S 0.08 Per Item 2. Cost of syrup per Snowie (use four decimal places): Napkin (need two per Snowie) S 0.01 Per Item Formula required in cell C9 Servings per gallon of syrup 28 Per Gallon Example: Cost per gallon / Servings per gallon Cost per gallon of syrup (concentrate, preservative, and sugar) S 4.25 Per Gallon 3. Cost of worker wages per day and month: Hourly rate for workers S 15.00 Per Hour Worker wages per day; formula required in cell C13 Event registration fee per day S 25.00 Per Day Electricity, insurance, maintenance, and permit costs per month S 250.00 Per Month Worker wages per month; formula required in cell C15 Kiosk rental cost per month S 650.00 Per Month Purchase cost of two ice shavers combined (5-year life) s 3,200.00 Depreciable Purchase cost of a flavor station (5-year life) S 1,200.00 Depreciable 4, Total variable cost per Snowie (include supplies and syrup): List variable item(s) and use a formula to retrieve and/or calculate values Examples of Formulas in Cells Click on F21 - this is a formula| $ 24.00 | earn points Click on F22 - this is a formula| 24,00 | earn points Click on F23 - this is not a formula | 24.00 no points Total variable cost per Snowie $0.0000 5. Total fixed cost per month (convert as necessary to monthly) List fixed item(s) and use a formula to retrieve and/or calculate values Total fixed cost per month _ 6. Break-even volume (i.e. units) per month Contribution margin per unit = (price per unit - variable cost per unit) Break-even point formula is in Cost-Volume-Profit chapter of the textbook Round up to a whole value 7. Number of Snowies to be sold to earn target profit of $2,200 per month Target income formula is in Cost-Volume-Profit chapter of the textbook Round up to a whole value 8. Think about the break-even and target profit quantities. Are these quantities realistic (try calculating how many Snowies per day and/or per hour must be sold as a reference point). Number of Snowies to be sold per day Number of Snowies to be sold per hour