In: Accounting
Question 1:
Consider the following revenue and cost data for Shannon’s Brewery in Keller, Texas. Shannon’s sells 35% of its craft beer production through its own on-premise taproom. The bulk of its sales (65%) are made off-premise via various retail outlets including supermarkets, bars, and restaurants. 40% of its of sales (on-premise and off-premise) consists of package sales (bottles and cans). Of this 40%, beer sold in cans accounts for 80% with sales of bottled beer accounting for the remaining 20%. Finally, the bulk of Shannon’s craft beer sales (60%) occurs in kegs (31 gallons per keg). Assume that overall sales for FY 2018 are expected to be $1,278,360. Given the proportions of beer sold in kegs, bottles, and cans, what will be the predicted dollar sales of beer sold in kegs? Round your answer to the nearest one dollar.
Question 2:
Assume the following costs in each of the categories identified in question one are:
Packaged (Cans & Bottles) |
$160,206 |
Kegs |
$67,098 |
Shrinkage/WIP Loss |
$42,000 |
Contract Labor |
$9,000 |
Direct Labor |
$240,000 |
Freight |
$18,000 |
Consumer Advertising |
$30,000 |
Trade Promotion |
$30,000 |
Sales Promotion |
$18,000 |
Salaries & Benefits |
$180,000 |
What is Shannon's cost of goods sold?
Question 3:
Assume that projected revenue for 2018 is 1,155,212. Also assume the following projected 2018 costs in each of the cost categories from question one:
Packaged (Cans & Bottles) |
$156,846 |
|
Kegs |
$71,684 |
|
Shrinkage/WIP Loss |
$42,000 |
|
Contract Labor |
$9,000 |
|
Direct Labor |
$240,000 |
|
Freight |
$18,000 |
|
Consumer Advertising |
$30,000 |
|
Trade Promotion |
$30,000 |
|
Sales Promotion |
$18,000 |
|
Salaries & Benefits |
$180,000 |
Given these costs, compute Shannon’s projected contribution in dollars.
1)
The following breakdowns can be obtained from the question:
Sales through own on-premise taproom = 35%
Sales made off-premise = 65%
Package sales of bottles and cans via on-premise and off-premise = 40% of total sales (i.e. of 100%)
Beer sold in kegs = 60% of total sales (i.e. of 100%)
Beer sold in cans = 80% of 40% of total
Bottled beer sold = 20% of 40% of total
Expected overall sales for FY 2018 = $1,278,360
From the breakdown above, the predicted dollar sales of beer sold in kegs can be calculated as follows:
Predicted amount of beer sold in kegs = 60% × $1,278,360 = $767,016
2)
Computation of Cost of Goods Sold:
Particular Amount
Packaged (Cans & Bottles) $160206
Kegs $67098
Work In Progress Loss $42,000
Contract Labor $9,000
Direct Labor $240,000
Freight $18,000
Cost of Goods Sold $536304
Note: All of these are not included in Cost of good sold
Consumer Advertising $30,000
Trade Promotion $30,000
Sales Promotion $18,000
Salaries & Benefits $180,000
3) Contribution = Sales - COGS
SALES = 1155212
COGS =
Packaged (Cans & Bottles) |
$156,846 |
|
Kegs |
$71,684 |
|
Shrinkage/WIP Loss |
$42,000 |
|
Contract Labor |
$9,000 |
|
Direct Labor |
$240,000 |
|
Freight |
$18,000 |
= $537530
Contribution = 1155212 - 537530 = $617682