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Assume that you have started a business which sells four products. The business has been running for six months and you have collected all the operational and financial data for the last six months, from January to June. You may manually generate, or use Excel or any other software to generate all the needed data.

$1.$ Please conduct the following exercises for each of the last six months with the data you have $$collected$.$

a$.$ Contribution margins and gross margins for per unit and all units of each product and all units of all products.

b$.$ Net incomes before and after tax.

c$.$ Break even points and points for certain targeted net incomes for each product and all products with a certain sales mix.

Note:

The following is a list of possible data that you may have collected for each of the months. You may make your own assumption for any other data needed.

a$.$ Sales volumes.

b$.$ Unit selling prices.

c$.$ Fixed production or acquisition costs.

d$.$ Variable production or acquisition costs.

e$.$ Fixed nonproduction costs $($such as selling and administrative costs$).$

f$.$ Variable nonproduction costs.

$2.$ Prepare income statements and balance sheets for each of the last six months $($January $$ June$).$

a$.$ Make your own assumption of the beginning paid$-$in capital at the beginning of January.

b$.$ Assume that you have purchases and sales both in cash and on credit.

c$.$ Manually generate, or use Excel or other software to generate, four transactions or more for purchases, sales, account receivable and account payable in each of the six months.

d$.$ Please also generate other transactions such as prepaid rent and rent expense, prepaid insurance and insurance expense, wages, interests, commissions, and any other expenses of your own choice.

$3.$ Prepare a master budget for the next six months $($July $$ December$).$

a$.$ Prepare the supporting data. You may manually generate or use Excel or other software to generate all needed data.

b$.$ Prepare the operating budget.

c$.$ Prepare budgeted income statement.

d$.$ Prepare financial budget.

e$.$ Prepare budgeted balance sheet.

$4.$ Prepare a capital budget for a new product line.

a$.$ Identify an improvement project for your business.

b$.$ You make your own assumption of project timeline, rate of return, operation cash inflows and outflows, disposal value, and any other necessary data.

c$.$ Evaluate the project using Net Present Value.

$5.$ Exercise flexible budget and variance analysis.

a$.$ Prepare a flexible budget for your business including three levels of sales or production activities.

b$.$ Extend the above flexible budget to an activity$-$based flexible budget including four activities.

c$.$ Make your own assumption of an execution result for a specific activity level budgeted.

i$.$ Compute the flexible budget variance, activity level variance, and static budget variance.

ii$.$ Include the price variance and quantity variance in the flexible budget variance.

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