Actual Animal Fee Data 2018

Instructions2018 Actual Data2018actualaverage Animal Fee3875annual Un

Use Excel formulas in all applicable cells. Actual Results 1. Compute results using the prior year actual accounting data listed above. Enter the information in the Budget and Variance Analysis tab, column F. 2. Use the skills you learned from the week five project. Compute the break even point in units and dollars. Compute the margin of safety. Enter the information in the Budget and Variance Analysis tab, rows 44-50. Flexible Budget 1a. Prepare a flexible budget using estimated annual unit sales = 2,900. Enter volume in the Budget and Variance Analysis tab, column H, row 4. Enter all other data and calculations in the appropriate cells (column H). 1b. Increase the average animal fee by 3.25%. 1c. Increase the variable cost per unit (animal) by 2.75%. This applies to all variable cost categories (excluding advertising, bedding, and specialty food). 1d. The driver for bedding and specialty food is the number of non-traditional animals. The company expect 250 animals per year at an average cost of $1.15 per animal for bedding and $1.32 per animal for specialty food. 1e. The company plans to relocate the business. This may decrease rent by $700. 1f. The company uses a dated advertising program including the yellow pages and billboard signs. The company plans to reduce costs and increase effectiveness by investing in an online campaign. The cost structure changes to a mixed cost and includes $800 fixed plus variable costs. The variable cost is equal to .01 per online view plus $2.75 for appointments scheduled online. The company expects 1,400 views and 225 scheduled appointments. 2. Use the skills you learned from the week five project. Compute the break even point in units and dollars. Compute the margin of safety. Enter the information in the Budget and Variance Analysis tab, rows 44-50. 3. Use formulas to compute variances and explain why the variances are positive or negative. Enter formulas in the Budget and Variance Analysis tab column J. Write your explanations in column L. Budget and Variance Analysis 2019 Annual Budget and Variance Analysis Annual Sales Volume (units) Enter sales volume in colums F and H, row 4. Flexible Actual Budget Variance Variance Explanation Sales Less: Variable Expenses Rewards Feed Veterinary Fees Labor Supplies Contractors Advertisement Bedding Specialty Food Total Variable Expenses Contribution Margin Less: Fixed Expense Lease Depreciation Interest & Penalties Insurance Rent Advertisement Repairs & Maintenance Entertainment SG&A Utilities Taxes Total Fixed Expense Net Income (Loss) Break Even (Units) Break Even (Dollars) Margin of Safety (Dollars)

Paper For Above instruction

The analysis of the prior year's financial data provides a foundation for projecting the company's future performance and making strategic decisions. Using the actual data from 2018, we can calculate key financial metrics such as break-even points, contribution margins, and variances to evaluate operational efficiency and profitability.

1. Calculation of Results Using 2018 Actual Data

The 2018 data indicates that the company sold 2,640 units at an average animal fee of $38.75. Variable costs comprise rewards ($0.05), feed ($3.13), veterinary fees ($3.52), labor ($1.45), supplies ($1.55), and contractors ($0.65). Fixed costs include lease ($250), depreciation ($770), interest and penalties ($235), along with insurance ($4,885), rent ($4,690), and advertising ($5,025). Total fixed costs amount to significant operational expenditure.

To analyze profitability, we calculate the contribution margin per unit as the selling price minus variable costs. The total contribution margin is then derived by multiplying the per-unit margin by the total units sold, which assists in determining the break-even point where total revenues equal total expenses.

2. Break-Even Analysis and Margin of Safety

The break-even point in units is determined by dividing total fixed costs by the contribution margin per unit. Using the current data, the break-even units are calculated, and then multiplied by the average animal fee to find the break-even sales dollars. The margin of safety, representing the difference between actual sales and break-even sales, indicates the extent of cushion before losses occur.

3. Flexible Budget Preparation

Adjustments to the budget incorporate anticipated changes in sales volume and costs. For example, increasing the animal fee by 3.25% impacts the revenue, while a 2.75% increase in variable costs affects the total expenses. The new sales volume is projected at 2,900 units, higher than actuals, requiring recalculation of revenue and costs accordingly.

Additional factors such as non-traditional animals influence variable expenses for bedding ($1.15 per animal) and specialty food ($1.32 per animal), with an expected 250 animals annually. Business relocation plans forecast a $700 reduction in rent, contributing to expenses optimization.

The online advertising campaign introduces a mixed cost structure, involving a fixed component ($800) and variable costs consisting of $0.01 per view (anticipated 1,400 views) and $2.75 per scheduled appointment (225 scheduled). These changes necessitate updated calculations for total advertising costs and contribution margins.

4. Variance Analysis and Explanations

Variance calculations compare actual results with budgeted estimates, identifying favorable or unfavorable variances. Positive variances indicate cost savings or higher revenues, while negative variances reveal overruns or missed opportunities. Formulas in Excel facilitate precise calculations, and explanations provide context—such as increased efficiency or unforeseen expenses.

Conclusion

Effective budgeting and variance analysis enable the company to monitor financial performance, adapt to changes, and make informed strategic decisions. Regularly updating budgets with actual data and analyzing variances supports continuous improvement and financial stability.

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