Expert Answer:Cookie Company Final Presentation

  

Solved by verified expert:This week you will submit your final project. You are looking for additional funding for your cookie company and will prepare a presentation for investors. In a clear, professional and concise manner prepare a PowerPoint slide presentation to introduce your company to a group of investors. Your presentation should cover at a minimum the following:Your company name, vision, mission, goals, and strategiesA balanced scorecardReview the mission statement and strategies you developed and submitted for the Module 02 Course Project Assignment.Fit the strategy points into the 4 perspectives of the balanced scorecard (you may need to create more strategies or fine tune your Module 02 strategies).Develop performance measures for each strategy point.State which department(s) would be responsible for each performance measure.Comment on how the departments must work together as a team to execute the balanced scorecard and how diversity among team members would enhance the outcomes.Cost information including contribution margin and break-evenWhen preparing your presentation, be mindful of the information in which an investor might be interested. Please include talking points on slide notes where appropriate.Include in-text citations and a reference page where necessary.
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Production
Ingredient cost
(variable)
Labor cost
(variable)
Depreciation
(fixed)
Other (fixed)
Total
25,000 Jars of Cost Per jar of soup (c.)
soup
(cost / 25,000 jars)
$
$
20,000
Budget for the coming
month (a.) (30,000 jars)
$
0.80 $
24,000
12,000 $
0.48 $
14,400
6,000 $
1,000 $
0.24
0.04
1.56 $
6000
1000
45,400
39,000
$
REQUIRED
Using the above information:
a. Prepare a budget for the coming month. Assume that production will increase to 30,000 jars of soup. Vari
b. Does the budget suggest that additional workers are needed? How do you know? Suppose the wage rate i
What would happen if management did not anticipate the need for additional labor in the coming month?
Additional Labor Hours Needed
Current Labor Hours UseTo underd = 12000/20 = 6000 hours
Labor Hours to be Used Next Mont = 14,400/20 = 7200 Hours
Additional Labor Hours Needed = 7200- 6000 = 1200 Hours
Does the budget suggest that additional workers are needed?
The budget indicates that there are more hours needed to produce 30,000 jars of soup. Thus, the current worker
Therefore, budget suggest that more workers are needed in next month.
What would happen if management did not anticipate the need for additional labor in the coming month?
If the management fails to anticipate the need for additional labor, Suzy’s Soups Company will either fail to prod
c. Calculate the actual cost per unit in in the previous month and the budgeted cost per unit for the coming m
Actual cost and Budgeted Cost
Current Month Actual Cost per unit = $1.56
Next Month Budgeted cost per unit = $1.51
Explain why the cost per unit is expected to decrease
As the total number of units of the jars of soup produced increases, the average fixed cost decreases
The company is currently producing and selling 325,000 jars of soup annually. The jars sell for $5.00 each. The
a. What is the incremental cost associated with producing an extra 50,000 jars of soup?
b. What is the incremental revenue associated with the price reduction of $0.40 per jar?
c. Should Suzy’s lower the price of its soup?
a. What is the incremental cost associated with producing an extra 50,000 jars of soup?
Revenues
$
325,000
1,625,000 $
Incremental Costs
375,000
1,875,000
Ingredient cost
(variable)
Labor cost
(variable)
$
260,000.00 $
300,000.00 $
40,000
$
156,000.00 $
180,000.00 $
24,000
$
$
72000
12000
500,000.00 $
1,125,000 $
72000
12000
564,000.00 $
1,311,000
Depreciation
(fixed)
Other (fixed)
Total costs
Profit
64,000
Incremental cost associated with producing an extra 50,000 jars of soup is $64,000
b. What is the incremental revenue associated with the price reduction of $0.40 per jar?
Incremental Revenue
Units
Price per Unit
Revenue
325,000
$5
$1,625,000
375000
$4.60
$1,725,000.00
$100,000.00
Incremental revenue associated with the price reduction of $0.40 per jar is $100,000
c. Should Suzy’s lower the price of its soup?
Additional profit
Units
Price per Unit
Revenue
Total cost
Profit
325,000
$5
$1,625,000
$ 500,000.00 $
$1,125,000.00
375000
$4.60
$1,725,000.00
564,000.00
$1,161,000.00
Suzy should lower the price of soup to $4.60 as it increase profits by $36,000.
$36,000.00
Cost per unit for the
coming month (c.)
$
0.80
$
0.48
$
$
$
0.20
0.03
1.51
o 30,000 jars of soup. Variable costs = (cost per jar X 30,000) Fixed costs do not change with a volume change.
w? Suppose the wage rate is $20 per hour. How many additional labor hours are needed for the coming month (show your
bor in the coming month?
Thus, the current workers cannot manage to deliver 30,000 jars of soup working 40 hours per week per worker.
bor in the coming month?
ompany will either fail to produce 30000 jars of soup next month or pay extra hours i.e. overtime hours to their
st per unit for the coming month. Explain why the cost per unit is expected to decrease (hint: look at the fixed costs).
cost decreases because the same amount of fixed costs is being spread over a larger number of units ofoutput.
ars sell for $5.00 each. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 3
0 jars of soup?
Current
Price per Jar of soup
Ingredient cost per unit
$5
$0.80
Labor cost per unit
Depreciation fixed cost per
month
Other Fixed Cost per
month
$0.48
$6,000
$1,000
ming month (show your work)?
7000
n will increase sales to 375,000 jars.
 This
paper seeks to form a cake company based on
these objectives.
i.
Establishing a location and name for the
company.
ii.
Setting tactical and operating criteria for the
company.
iii. Setting cake specifications
iv. Deciding on a cake recipe
v.
Establishing an accounting system for the cost of
each cake.
Cake Empire
 Cake Empire will major in providing pocket
friendly healthy cakes that meet the ‘conscious
consumer’s’ expectations.
 Cakes will be delivered in the New York area only
upon placing an order.
 The company seeks to take advantage of today’s
conscious consumer who is aware of eating
healthy at a pocket friendly price.
Cake Empire will be to focus on the market niche of lacking
healthy cakes for consumers with preexisting medical
conditions like diabetes, kids and consumers who just want to
keep healthy.
 Cake Empire seeks to provide pocket friendly, healthy cakes to
all New Yorkers.

The target market and selling strategy
 Cake Empire’s main target market will be the cake loving
residents of New York especially those with preexisting health
conditions and ceremony organizers.
 The company’s selling strategy will be through its storefronts
and also through e-commerce by creating online pages in
social media sites such as Facebook and Twitter.
Expansion plans
 Within a year of establishment,
Cake Empire will expand through
establishing tradition brick and
motor store fronts by using profits
to purchase new stores.
 These store fronts will serve to give
customers a place to collect orders
and to sit down and have a piece of
cake.
 Also, Cake Empire will seek to
look for additional money to meet
its operating costs through
partnering with investors.
Cake Empire’s main products
o Cake empire will look to offer a
diversity of confectionaries. This
will include:
i.
Cookies
ii.
Cakes
iii.
Muffins
iv.
Soft drinks
Area of Operation
o Cake Empire will operate within
the New York area.
o It will offer free delivery for cakes
within the New York area and
charge a delivery fee for orders
outside New York.
 Here
at Cake Empire, our goal is to bake and
deliver quality healthy cakes to the comfort of
your doorstep.
Long range goals
 To be the largest cake supplier in America.
 The
company’s strategy will be to use
differentiation focus strategy in targeting its
consumers.
 This strategy seeks to divide the New York
populous into high and low spending consumers
and incorporating a marketing mix strategy to
penetrate the market (Lui, 2018)
 The company will also employ a market
penetration strategy by keeping its cake prices
lower than its competitors (Khan, 2014).
 Cake
Empire seeks to increase its popularity
within 6 months of establishment through
partnering with complementary industries and
advertisement through social media sites.
 To create a profit of $250,000 in the first year
which will be reinvested in establishing more
stores.
 To increase profit margins by 20% each
consecutive year.
 Cake
Empire’s cakes will come in several types,
shapes and frosting colors according to consumer
needs.
 The main cake features will be cylindrical shaped
cakes with white frosting as shown in the first
slide. They will be of 1 &2 Kg sizes.
 Cake ingredients will include: baking powder,
flour, margarine, sugar, milk eggs and frosting.
These will be fetched from the New York locale.
Pre heat oven to 350 degrees F (175 degrees Celsius).
❖ Grease and flour a 9*9 inch pan with paper liners.
❖ Cream together eggs, then stir in vanilla. Combine baking
powder and flour then add to the creamed mixture and
mix. Add milk to the mixture and stir until the paste is
smooth. Spoon batter into the prepared pan.
❖ Bake for 30-40 minutes.

Cake order 1
Job cost card
Money
Customer; A
Batch A
custom
Specifications
1 kg Red Velvet cake.
Date of order
2/24/2019
Date of completion
2/25/2019
Job charges in ($)
Previous months
Current month
Cost summary
Material cost
$0
$8.00
$8.00
Labour cost
$0
$10.00
$10.00
Overhead
$0
$12.00
$12.00
Totals
$30.00
Units completed
50
Product unit cost
$8.00




Business starting and operating licenses.
Depreciation costs.
Delivery costs.
Insurance premiums.
 Cake
Empire shall use a job order costing system
as its accounting system. This job order costing
system is set to effectively assign and record cost
per unit output (Maskell, 2016).
 The job order costing system will allow the
company to assign costs per cake.
 This accounting system will be used in
determining cake prices and deciding on whether
the company will reach its set profit margin with
the current cake pricing.
 Starting
a company is tricky at best. This paper shows the
factors to be considered when establishing a company.
Key among this is identifying a unique product to offer
the target market and establishing a suitable location for
the company.
 The company seeks to have superior customer company
interaction through stores and e-commerce. This will
enable it to reach a profit margin of $250,000 which
gradually grows with each consecutive year.
 The company’s accounting system is designed to ensure
all company transactions are taken into account. The flow
of cost looks at how the company capital is handled.
 Khan,
M.T., (2014). The concept of ‘marketing mix
and its elements (a conceptual review paper).
International journal of information, business, and
management, 6(2).
 Lui, W., Atuahene-Gima, K. (2018). Enhancing
product innovation performance in a dysfunctional
competitive environment. The roles of comprtitive
strategies and Market-based assets. Industrial
Marketing Management.
 Maskell, B. H., Baggaley, B., & Grasso, L. (2016).
Practical lean enterprise. Productivity Press.
Variable Cost
Material
Labor
Overhead
Fixed Costs
Rent
Mixed Costs
Electric
8 Per Unit Produced
10 Per Unit Produced
12 Per Unit Produced
750 Per Month
Month
January
February
March
April
May
June
Kilowatt Hours Electric
Used Costs
1866
1439
1146
1046
996
1760
$230.00
$202.00
$197.00
$190.00
$182.00
$225.00
Monthly Electricity Cost
$240.00
$220.00
High Production
Low Production
Difference
1866
996
870
Slope (VC per Unit)
$0.06
Total Cost
Variable Cost
Fixed Cost
$230.00
$102.95
$127.05
Eelctric Costs
High Low:
$230
$182.00
$48.00
()
$182.00
$54.95
$127.05
Variable Cost of electricity per Unit = $0.06
Fixed cost of electricity = $127.05
$200.00
$180.00
$160.00
$140.00
$120.00
800
1000
1200
1400
Kilowatt Hours Used
hly Electricity Cost
1400
Kilowatt Hours Used
1600
1800
2000
Cake Empire
Contribution Margin Income Statements
2/25/2019
Revenue:
Cake sales
Less Variable Expenses
Material Cost
Labor Cost
Overhead
Total Variable Expenses
Contribution Margin
Less Fixed Expenses
Rent
Total Fixed Expenses
Net Profit
$3,250.00
$400.00
$500.00
$600.00
$1,500.00
$1,750.00
750
$750.00
$1,000.00
Breakeven Analysis
Fixed cost
Rent per day
Total Fixed Cost
Variable Cost
Material
Labor
Overhead
Total Variable Cost
$25.00
$25.00
$8.00
$10.00
$12.00
Selling Price of the Cake
Break-even in Number of Cakes per day
Break-even in sales dollars each day
Sales to earn a daily profit of $100
$30.00
$65.00
0.714286 cakes
$46.43
2.252747 cakes
Selling 2.25 cakes a day is realistic. It can be achieved with minimum advertising.
Special offer
Production capacity
Selling price
10000
$65.00 cost plus 1%
Variable Cost
Material
Labor
Overhead
Logo per unit
$8.00
$10.00
$12.06
$0.00
Fixed cost other than electricity
500
Total variable cost
$8.00
$10.00
$12.00
$0.03
$877.05
$200.00
Price
Profit statement
Sales
Variable costs:
Material
Labor
Overhead
Logo
Contribution
Fixed cost
Profit
Total profit
Normal sales
Special offer
$650,000.00
$17,891.50
$80,000.00
$100,000.00
$120,600.00
$0.00
$349,400.00
$877.05
$348,522.95
$4,000.00
$5,000.00
$6,000.00
$15.00
$2,876.50
$200.00
$2,676.50
$8.00
$10.00
$12.00
$0.03
$2.50
$32.53
35.783
If 85% special order is accepted
New structure
Production capacity
Selling price
9500
$65.00
Variable Cost
Material
Labor
Overhead
Logo per unit
$8.00
$10.00
$12.06
$0.00
Fixed cost other than electricity
$877.05
85% special order
500
$8.00
$10.00
$12.00
$0.03
$200.00
Profit statement
Sales
Variable costs:
Material
Labor
Overhead
Logo
Contribution
Fixed cost
Profit
Total profit
Normal sales
Special offer
$617,500.00
$15,207.78
$76,000.00
$95,000.00
$114,570.00
$0.00
$331,930.00
$877.05
$331,052.95
$4,000.00
$5,000.00
$6,000.00
$15.00
$192.78
$200.00
-$7.23
$331,045.73
If the company under take the project at the reduced price, the total profit will reduce due to
the loss made from the special offer project. Total profit generated for selling 10,000 units is
$348,522.95 and total profit made from the project at a charged price is $2,676.50. When the
project is undertaken at a reduced price, the total profit earned will be reduced to $331,045.73
. Therefore, the company should not accept the project at a reduced price.

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