ACC 5301 Week 2 – Cookie Business

Instructions

Cookie Business

In this project, you willopen your own specialty cookie company to see how product costingmethods and changes in production affect business decisions. You willcreate a series of reports and analyze the results using the templatesprovided to guide you through the project.

The learning objectives of this project are as follows:

1. Gain an understanding of product costing (direct materials, direct labor, and overhead)
2. Review job order costing
3. Review process costing
4. Make business decisions based on analyzing accounting data.

Forthis component, you will prepare a four-to-five-page written report(including the spreadsheets, which should be incorporated into yourpaper), with at least three scholarly sources using the Unit II Project Template.

Youwill create a report based on the premise that you want to establish acookie business that sells only one type of specialty cookie with twoemployees. Your report will provide the following information:

• Introduction (Part 1)
  • Create a name and establish a locale for the business.
  • Construct a mission statement.
  • Decide on the type of cookie you want to sell.
• Costing and Sales Information, Production of 1,000 cookies (Part 2)
  • Estimate and explain the costs per cookie based on job order costing.Prepare a job order cost sheet by researching the pricing for these topfive ingredients: butter, sugar, vanilla, flour, chips/add-ins.
    • Manufacturing overhead is 30% of direct labor costs.
    • It will take two employees working two days to make 1,000 cookies.
  • For process costing,you will examine the costs per 1,000 cookies looking at these top threeprocesses (departments): Mixing, Add-ins, and Packaging.
    • The Mixing Department will be examined in depth.
      • Materials will be added at the beginning of the process.
      • Thecookies will be in the Mixing Department for a total of eight hours;however, the cookies will only be 40% complete before they aretransferred to the Add-ins Department. (Use this % for conversioncosts.)
  • Using the job-order costing system, determine the costs and sales price of your cookies.
• Differences between two-process cost systems (Part 3)
  • Compareand contrast the cost methods examined in this project. Discuss usingthe information created, which costing method in this example, givesmore complete costing information, and why.
  • Discuss product costs and conversion costs and their importance in both costing systems.
• Variances in production – Costs and Revenues (Part 4)
  • Examinethe variances in both the job order costing and process costing (forthe Mixing Department only) systems if the number of your cookies was todecrease to 500 cookies or increase to 1,500 cookies.
  • Examine the effect on revenue these two variances in production would have.
• Conclusion (Part 5)
  • Use the Unit II Cookie Project Spreadsheet Templates for your costing systems and embed them into your case study document.

Foryour paper, be sure to use APA formatting throughout, and reach out tothe Writing Center or the CSU Online Library for assistance withresearch, writing, and formatting. Include at least two of the threeresources from the CSU Online Library in your report.