ACCT 20200 spring 2017

Excel Assignment #1

Part 1: Preparing a Contribution Margin Income Statement

1. Assume that a company is budgeting to sell 1,845 units of a product at a selling price per unit
of $36. The variable cost per unit is $24 and total fixed costs are $4,800.
REQUIRED
Prepare a contribution margin income statement.

2. Suppose the company is unsure exactly how many units they will sell. As such, their
marketing department has provided a worst case scenario where sales would be 1,445 units and
a best case scenario where sales would be 2,100 units. Assume that the selling price per unit,
variable cost per unit and fixed costs will remain constant (per part 1).
REQUIRED
Prepare a contribution margin income statement for both the worst case scenario (sales of
1,445 units) and the best case scenario (sales of 2,100 units).

3. Suppose the company believes that 1,845 units is the most likely volume of sales. However,
it is unsure at what selling price per unit it will be able to charge. The marketing department has
provided a high estimate of $42 per unit and a low estimate of $29 per unit. Assume that
variable costs per unit and fixed costs will remain constant (per part 1).
REQUIRED
Prepare a contribution margin income statement for both the high ($42 per unit) and low
($29 per unit) estimate of the selling price.

4. Suppose the company believes that 1,845 units is the most likely volume of sales and that
$36 is the most likely selling price per unit. However, the production department is unsure as to
the exact variable cost per unit. The production department has provided a high cost per unit of
$33 and a low cost per unit of $20. Assume that fixed costs will remain constant (per part 1).
REQUIRED
Prepare a contribution margin income statement for both the high variable cost per unit
($33) and the low cost per unit ($20).

5. Suppose the company believes that 1,845 units is the most likely volume of sales that $36 is
the most likely selling price per unit, and that $24 is the most likely variable cost per unit.
However, the accounting department is unsure as to the exact value of fixed costs. They have
provided a high estimate of fixed costs to be $6,600 and a low estimate of fixed costs to be
$2,900.
REQUIRED
Prepare a contribution margin income statement for both the high estimate of fixed costs
($6,600) and for the low estimate of fixed costs ($2,900).

© Copyright of Michael J. Meyer 2017. Use by permission only.

 6. Based on the contribution margins you have created in parts 1-5, answer the following
questions (your comparison is relative to part 1 data):

a. When sales volume decreases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

b. When sales volume increases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

c. When the sales price per unit increases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

d. When the sales price per unit decreases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

e. When the variable cost per unit increases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

f. When the variable cost per unit decreases,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

g. When fixed costs increase,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

h. When fixed costs decrease,

i. What is the impact on net income?
ii. What is the impact on the contribution margin?

© Copyright of Michael J. Meyer 2017. Use by permission only.

Part 2: Mixed Costs

Teresa Company has had trouble estimating its total costs. The company knows that some of its
costs are variable and some are fixed, but no idea how to separate out the variable and fixed
components. They have asked you to evaluate their costs so that they can estimate them for
the upcoming budget. They expect that their costs are related to Sales.

Total
Month Sales Cost
$3,359,3 $2,511,1
January 90 02
$2,568,0 $2,475,4
February 78 80
$3,126,3 $2,352,6
March 49 90
$2,477,5 $2,112,3
April 97 43
$3,644,5 $2,792,4
May 10 31
$3,537,4 $2,655,8
June 86 98
$2,960,2 $2,468,2
July 22 92
$3,024,2 $2,530,5
August 70 23
Septemb $3,017,4 $2,227,3
er 85 92
$2,967,4 $2,262,9
October 85 35
Novembe $3,701,5 $2,553,9
r 34 13
Decembe $2,640,8 $2,037,6
r 93 39

1. What is the mixed cost (y-values)?

2. What is the activity (x-values)?
3. What is the high month?
4. What is the low month?
5. Using the high/low method, determine the variable rate (slope).
[Include the calculation of the change in y, change in x, and calculation of slope]
6. Using the high/low method, determine the fixed cost portion of the mixed cost
(intercept).
[Formula should include link to slope calculated in part 5 and high (low) data in the
original data. Use b=y-mx where, y and x are the high or low amounts from the given
data and m is the slope calculated in part 5]
7. Using the excel regression formula (=slope), determine the variable rate (slope)

© Copyright of Michael J. Meyer 2017. Use by permission only.

 8. Using the excel regression formula (=intercept), determine the fixed cost portion of the
mixed cost (intercept). If the company expects Sales to be $3,250,000, estimate the
Total Costs using both the results from the high-low method (part 5 &6) and regression
(part 7&8).
[Determine Total Cost using high/low method (linking to parts 5&6) and Total Cost using
regression (linking to parts 7&8)]
9. If Sales are $3,250,000, prepare a contribution margin income statement using both the
high-low method and regression variable cost rates and fixed costs.

© Copyright of Michael J. Meyer 2017. Use by permission only.

Excel Rules:
1. You must use the Excel Templates provided on the ACCT 20200 website
(www.acct20200.com). Note that each template is individualized for each student with
an ID code for each student. It will be assumed a Honor Code VIOLATION if you use a
template with someone else’s ID Code.

2. You must use Microsoft EXCEL and not any other spreadsheet program. Failure to use
MS Excel will result in a zero grade. Files that are not readable by your instructor or the
ACCT 20200 website will receive a zero grade. FYI, use of Google Sheets makes the
template unreadable by the ACCT 20200 website.

3. You must use links and formulas where ever possible. Failure to exploit Excel will result
in a zero grade. There are only a couple of instances where typing numbers may be
necessary.

4. You must sign your name to the honor code statement (the first sheet of the Excel
template). Failure to sign your name (by typing your name) will result in a zero grade.

5. You must name your Excel file as: last name first name Excel 1.

6. Failure to turn in a file that is readable by your instructor will result in a zero grade.

7. You must upload your completed template BEFORE the due date and time in order to
receive credit.

© Copyright of Michael J. Meyer 2017. Use by permission only.