he purpose of this assignment is to assess your ability to:
Explain the management planning and control cycle, and identify the major differences between financial accounting and managerial accounting.
Describe the difference between variable and fixed cost behavior patterns.
Explain and illustrate the difference between the traditional income statement format and the contribution margin income statement format.
Describe the meaning and significance of the break-even point and illustrate how the break-even point is calculated.
Action Items
Complete the following items listed in the Week 8 Reading and Preparation object:
Read Chapter 13 in Marshall et al., (2014).
Read the “Calculating Your Costs Per Visit” article.
Course Project Option 1 is to complete the questions on Case 10.13 for the company you selected.
Course Project Option 2 is to complete the following budgeting assignment:
Stillwater Video Company, Inc. produces and markets two popular video games, High Range and Star Boundary. The closing account balances on the company’s balance sheet for the last year are as follows: Cash, $18,735; Accounts Receivable, $19,900; Materials Inventory, $18,510; Work in Process Inventory, $24,680; Finished Goods Inventory, $21,940; Prepaid Expenses, $3,420; Plant and Equipment, $262,800; Accumulated Depreciation-Plant and Equipment, $55,845; Other Assets, $9,480; Accounts Payable, $52,640; Mortgage Payable, $70,000; Common Stock, $90,000; and Retained Earnings, $110,980.
Operating budgets for the first quarter of the coming year show the following estimated costs: direct materials purchases, $58,100; direct materials usage, $62,400; direct labor expense, $42,880; overhead, $51,910; selling expenses, $35,820; general and administrative expenses, $60,240; cost of goods manufactured, $163,990; and cost of goods sold, $165,440. Estimated ending cash balances are as follows: January, $34,610; February, $60,190; and March, $54,802. The company will have no capital expenditures during the quarter.
Sales are projected to be $125,200 in January, $105,100 in February, and $112,600 in March. Accounts receivable are expected to double during the quarter, and accounts payable are expected to decrease by 20 percent. Mortgage payments for the quarter will total $6,000 of which $2,000 will be interest expense. Prepaid expenses are expected to go up by $20,000, and other assets are projected to increase by 50 percent over the budgeted period. Depreciation for plant and equipment (already included in the overhead budget) averages 5 percent of total plant and equipment for the year. Federal income taxes (34 percent of profits) are payable in April. The company pays no dividends.
Required
Prepare a budgeted income statement for the quarter ended March 31.
Prepare a budgeted balance sheet as of March 31.
Submission Instructions
Submit the file using the Submit button above.
Grading Criteria
Your work will be graded according to the following rubric. Please do not hesitate to refer to the rubric before, during, and after completing your assignment.
Option 1 Grading Rubric
Criteria
Level 3
Level 2
Level 1
Depth of Answer
Provides an in-depth answer with further elaboration. Critical thinking is evident throughout.
310 points
Provides an in-depth answer. Evidence of some critical thinking.
217 points
Provides a brief answer lacking depth. Not enough information given. Little evidence of critical thinking.
0 points
Option 2 Grading Rubric
Criteria
Level 3
Level 2
Level 1
Budgeted Income Statement
The income statement shows all required parts.
160 points
The income statement shows some of the required parts.
112 points
The income statement does not show the required parts.
0 points
Budgeted Balance Sheet
The balance sheet shows all required parts.
150 points
The balance sheet shows some of the required parts.
105 points
The balance sheet does not show the required parts.
0 points
