Question

In: Accounting

So I did the Milestone 1 already and it seems to be correct. But now i...

So I did the Milestone 1 already and it seems to be correct. But now i need to do the Milestone 2

Please help.

Street Sweep
MILESTONE 1 - Variable & Fixed Cost Exercise
INSTRUCTIONS:
Determine the per unit cost for each dog.
Fill in the blanks to get the per unit cost and fixed cost of each service.
Based on 5 grooms per day
GROOMING
Item Variable Costs Item Fixed Costs
Shampoo $                      1.04 Groomer $              2,080.01
Clipper(s)                           1.37 Rent                        30.95
Bowls                           0.72 Loan                        20.00
Towels                           5.83 Utilities and Insurance                        28.57
Scissors                           1.01 Depreciation on heating system                           3.95
Cleaning Products: Odoban                           2.08
Cleaning Products: Simple Green                           2.36
Draw                      200.00
Total Variable Costs $                      9.97 Total Fixed Costs $              2,367.92
Based on 22 dogs per day for six days a week. Assume 25 operating days for kennel and 22 eight-hour work days for kennel attendant.
DAY CARE
Item Variable Costs Item Fixed Costs
Day care attendant $                      2.88 Rent $                  232.14
Toys                           0.27 Loan                      150.00
Bowls                           0.10 Utilities and Insurance                      214.29
Towels                           1.40 Depreciation on heating system                        29.64
Cleaning Products: Odoban                        15.59
Cleaning Products: Simple Green                        16.78
Draw                      200.00
Total Variable Costs $                      4.74 Total Fixed Costs $                  858.44
Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant.
BOARDING
Item Variable Costs Item Fixed Costs
Kennel attendant $                      5.63 Depreciation on kennels $                    80.00
Bowls                           0.86 Rent                      386.90
Towels                           0.87 Loan                      250.00
Utilities and Insurance                      357.16
Depreciation on heating system                        49.40
Cleaning Products: Odoban                        25.98
Cleaning Products: Simple Green                        29.55
Draw                      200.00
Total Variable Costs $                      7.36 Total Fixed Costs $              1,378.99
Street Sweep
MILESTONE 2 - Contribution Margin per Unit & Contribution Margin Ratio
INSTRUCTIONS:
Select a price from the scenarios below and compute the contribution for each service based on your selected price.
Variable cost per unit comes from your Variable_Fixed tab completed in Milestone 1.
SCENARIO (choose one from each category):
Dog Day Care
1. With pricing at $18 per dog per day, you can expect to have 22 dogs per day.
2. With pricing at $20 per dog per day, you can expect to have 15 dogs per day.
3. With pricing at $25 per dog per day, you can expect to have 10 dogs per day.
Overnight Boarding
1. With pricing at $25 per dog per day, you can expect to have 12 dogs per day.
2. With pricing at $28 per dog per day, you can expect to have 10 dogs per day.
3. With pricing at $30 per dog per day, you can expect to have 7 dogs per day.
Basic Groom
1. With pricing at $25 per dog per day, you can expect to have 5 dogs per day.
2. With pricing at $30 per dog per day, you can expect to have 4 dogs per day.
3. With pricing at $35 per dog per day, you can expect to have 3 dogs per day.
DAY CARE BOARDING GROOMING
Sales Price $                           -   $                           -   $                           -  
Variable Cost per Unit                               -                                 -                                 -  
Contribution Margin $                           -   $                           -   $                           -  
Street Sweep
MILESTONE 2 - Break-Even Analysis
INSTRUCTIONS:
Show all steps and calculations to determine the break-even.
Determine the break-even for the target profit levels as outlined in the instructions.  
Break-even = Fixed Costs / Contribution Margin
DAY CARE BOARDING GROOMING
Sales Price $                           -   $                           -   $                           -  
Fixed Costs $                           -   $                           -   $                           -  
Contribution Margin $                           -   $                           -   $                           -  
Break-even Units (round up)                               -                                 -                                 -  
Target Profit $                  417.00 $                  583.00 $              1,000.00
Break-even Units (round up)                               -                                 -                                 -  
Target Profit $                  667.00 $                  909.00 $              1,500.00
Break-even Units (round up)                               -                                 -                                 -  

Solutions

Expert Solution

MILESTONE 2

Day Care (22 dogs per day) Boarding (12 dong per day) Grooming (5 grooms per day)
Sales Price $                                        18.00 $                                         25.00 $                                              25.00
Variable Cost Per Unit $                                           4.74 $                                            7.36 $                                                 9.97
Contribution Margin $                                        13.26 $                                         17.64 $                                              15.03
Day Care (22 dogs per day) Boarding (12 dong per day) Grooming (5 grooms per day)
Sales Price $                                        18.00 $                                         25.00 $                                              25.00
Variable Cost Per Unit $                                           4.74 $                                            7.36 $                                                 9.97
Contribution Margin $                                        13.26 $                                         17.64 $                                              15.03
Fixed Cost $                                      858.44 $                                   1,378.99 $                                        2,367.92
Break-even Units 65 79 158

Formula - Fixed Cost / Contribution per unit

Day Care Boarding Grooming
Fixed Cost $                                      858.44 $                                   1,378.99 $                                        2,367.92
Target Profit $                                      417.00 $                                       583.00 $                                        1,000.00
Total $                                  1,275.44 $                                   1,961.99 $                                        3,367.92
Contribution Margin $                                        13.26 $                                         17.64 $                                              15.03
Break Even Units 97 112 225

Formula - (Fixed Cost + Target Profit ) / Contribution Per Unit

Day Care Boarding Grooming
Fixed Cost $                                      858.44 $                                   1,378.99 $                                        2,367.92
Target Profit $                                      667.00 $                                       909.00 $                                        1,500.00
Total $                                  1,525.44 $                                   2,287.99 $                                        3,867.92
Contribution Margin $                                        13.26 $                                         17.64 $                                              15.03
Break Even Units 115 130 258

Formula - (Fixed Cost + Target Profit ) / Contribution Per Unit


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