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ut the first thing you want to understa enarios. front analysis you have accumulated and sales revenue, noted below, repre

ut the first thing you want to understa enarios. front analysis you have accumulated and sales revenue, noted below, repre

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 1CE: Ventana Window and Wall Treatments Company provides draperies, shades, and various window...
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I am having trouble with the income statement part. Thanks!

GENERAL INSTRUCTIONS: You are considering opening up a coffee shop. It will be a straightforward place that sells various brews of coffee. But the first thing you want to understand is what the projection of net income will be under different scenarios. To do the upfront analysis you have accumulated data on all the costs related to running a coffee shop. These costs and sales revenue, noted below, represent all the costs you can think of based on your vision of the coffee shop. You are the business owner, but you won't take a salary. Your earnings will be based on how much Net Income the coffee shop makes. YOUR ASSIGNMENT: Classify each cost as fixed or variable (see below) Calculate the annual cost for cost description (see below) Using the cost and sales data below, prepare Income Statements (to the right) based on the criterion provided. ALL YELLOW CELLS REQURE DATA TO BE INPUT (START BELOW)
Transcribed Image Text:GENERAL INSTRUCTIONS: You are considering opening up a coffee shop. It will be a straightforward place that sells various brews of coffee. But the first thing you want to understand is what the projection of net income will be under different scenarios. To do the upfront analysis you have accumulated data on all the costs related to running a coffee shop. These costs and sales revenue, noted below, represent all the costs you can think of based on your vision of the coffee shop. You are the business owner, but you won't take a salary. Your earnings will be based on how much Net Income the coffee shop makes. YOUR ASSIGNMENT: Classify each cost as fixed or variable (see below) Calculate the annual cost for cost description (see below) Using the cost and sales data below, prepare Income Statements (to the right) based on the criterion provided. ALL YELLOW CELLS REQURE DATA TO BE INPUT (START BELOW)
based on the criterion provided. 12000 13600 40800 ALL YELLOW CELLS REQURE DATA TO BE INPUT (START BELOW) INCOME STATEMENT SCENAKIO CHANGE I SCENAKIO CHANGE Z SCENAKIO CHANGE 5 (COMPARED TO BASE (COMPARED TO BASE (COMPARED TO BASE BREAK EVEN POINT BASE SCENARIO SCENARIO) SCENARIO) SCENARIO) What Happens to Net Income if I Use What Happens to Net Income if I Spend Premium Kona Coffee YOU CREATE A $5,000 on Advertising Grounds Costing $1.25 SSCENARO AND BRING IT TO THE Classify Annual Annual Target Net Income of $60,000 and Cups of Coffee per cup and Cups of ERAL BUSINESS COSTS Cost Cost At Break Even Point Increases 10%? Coffee Increases 8%? DISCUSSION GROUP Monthly Monthly $ 6,000 $ 1,800 Rent $ 500 Fixed Sales Revenue Utilities 2$ 150 Fixed Variable Costs Insurance Annually 2$ 800 Fixed 2$ 800 Contribution Margin 2$ Water Quarterly $ 150 Fixed 2$ 600 Fixed Costs Coffee Making Equipment - Depreciation (based on cost of $12,000 and a 5 year life $ 2,400 $ 1,200 and zero salvage value) Annually $ 2,400 Fixed Net Income Table and Chair Rental Monthly $ 100 Fixed Laptop and Credit Card Scanner - Depreciation (based on cost of $4,800 with a 4 year useful life and zero salvage value) Annually $ Barrista Salary BREAK EVEN POINT CALCULATION BASED ON THE SCENARIO ABOVE $ 1,200 $ 25,000 $ 1,800 1,200 Fixed Annually $ 25,000 Fixed -Cups of Coffee Other Miscellaneous Costs Monthly 2$ 150 Fixed -Sales Revenue CM Ratio: T OF CUP OF COFFEE -Dollars Coffee Grounds per cup 0.75 Variable -Ratio Sugar/Cream/Flavoring per cup 0.05 Variable Paper Cup and Top per cup 2$ 0.12 Variable Heat Protection Sleeve per cup 0.05 Variable Plastic Stirrer per cup 0.03 Variable ES PRICE OF COFFEE per cup $ 4.00 Cost of coffee $ 1
Transcribed Image Text:based on the criterion provided. 12000 13600 40800 ALL YELLOW CELLS REQURE DATA TO BE INPUT (START BELOW) INCOME STATEMENT SCENAKIO CHANGE I SCENAKIO CHANGE Z SCENAKIO CHANGE 5 (COMPARED TO BASE (COMPARED TO BASE (COMPARED TO BASE BREAK EVEN POINT BASE SCENARIO SCENARIO) SCENARIO) SCENARIO) What Happens to Net Income if I Use What Happens to Net Income if I Spend Premium Kona Coffee YOU CREATE A $5,000 on Advertising Grounds Costing $1.25 SSCENARO AND BRING IT TO THE Classify Annual Annual Target Net Income of $60,000 and Cups of Coffee per cup and Cups of ERAL BUSINESS COSTS Cost Cost At Break Even Point Increases 10%? Coffee Increases 8%? DISCUSSION GROUP Monthly Monthly $ 6,000 $ 1,800 Rent $ 500 Fixed Sales Revenue Utilities 2$ 150 Fixed Variable Costs Insurance Annually 2$ 800 Fixed 2$ 800 Contribution Margin 2$ Water Quarterly $ 150 Fixed 2$ 600 Fixed Costs Coffee Making Equipment - Depreciation (based on cost of $12,000 and a 5 year life $ 2,400 $ 1,200 and zero salvage value) Annually $ 2,400 Fixed Net Income Table and Chair Rental Monthly $ 100 Fixed Laptop and Credit Card Scanner - Depreciation (based on cost of $4,800 with a 4 year useful life and zero salvage value) Annually $ Barrista Salary BREAK EVEN POINT CALCULATION BASED ON THE SCENARIO ABOVE $ 1,200 $ 25,000 $ 1,800 1,200 Fixed Annually $ 25,000 Fixed -Cups of Coffee Other Miscellaneous Costs Monthly 2$ 150 Fixed -Sales Revenue CM Ratio: T OF CUP OF COFFEE -Dollars Coffee Grounds per cup 0.75 Variable -Ratio Sugar/Cream/Flavoring per cup 0.05 Variable Paper Cup and Top per cup 2$ 0.12 Variable Heat Protection Sleeve per cup 0.05 Variable Plastic Stirrer per cup 0.03 Variable ES PRICE OF COFFEE per cup $ 4.00 Cost of coffee $ 1
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