The document outlines a report to be presented to investors after the first month of business, detailing financial performance through income statements and variance analysis, alongside justifications for costing strategies. It emphasizes the need for clear communication of financial data and the strategic decisions made regarding pricing, contribution margins, and target profits to build investor confidence. The report must adhere to management accounting standards and include financial statements, performance evaluations, and discussions on variances to inform future budgeting and planning.

1. Scenario
Your business has been open for a month, and you have
prepared an income statement and completed a variance analysis
on the data. Now you will meet with investors and a few other
internal stakeholders to share your company’s progress over the
past month and how it has performed with respect to your cost
and budget projections. The investors would like to see the
thought process behind your financial strategy and how your
company has performed in its first month. They have therefore
asked you to present a report that includes the costing and
income data from your Project Workbook.
Directions
Submit a detailed report to your potential investors and other
stakeholders to explain and defend your costing strategies and
to share your business’s performance to date. Your report can
be in the form of a PowerPoint presentation or a Word
document (based on the templates provided in the What to
Submit section). In either format, be sure to effectively
communicate with your stakeholders by breaking down concepts
and using investor-friendly language to build their trust and
confidence. If you choose to do a PowerPoint presentation,
you’ll need to include speaker notes for each slide.
Introduction
: Provide a short overview of your company and the purpose of
this report.
Business Overview
: Name your company and describe its business and your vision
for its future.

2. Purpose of the Report
: Explain the purpose of the report and describe why the
information is important.
Methods and Approach
: Explain the management accounting methods you used for
generating the information that you are about to share in terms
of your adherence to industry standards and the American
Institute of Certified Public Accountants (AICPA) code of
ethics.
Financial Strategy
: Review your original business plan and costing strategies.
Costing System
: Justify the use of job order costing for this business. Be sure
to compare and contrast the various costing systems you learned
about in this course as part of your defense.
Selling Prices
: Share and explain the selling prices you established for each
of your products. Be sure to reference your cost-volume-profit
analysis in your defense.
Contribution Margin
: Share and explain your contribution margin per unit. Be sure
to reference your cost-volume-profit analysis in your defense.
Target Profits
: Identify your break-even points for achieving different target
profits. Then explain the target profits you selected for each
area of your business. Be sure to reference your cost-volume-

3. profit analysis in your defense.
Financial Statements
: Using the information in the Milestone Two Market Research
Data Appendix, assess your financial performance to date.
Statement of Cost of Goods Sold
: Share the statement of cost of goods sold and logically
interpret the business’s performance against the provided
benchmarks.
Income Statement
: Share the income statement and logically interpret the
business’s performance against the provided benchmarks.
Variances
: Illustrate all variances for the direct labor time and the
materials price.
Significance of Variances
: Evaluate the significance of the variances in terms of the
potential to impact future budgeting decisions and planning.
TEMPLATE FOR DOCUMENT
Introduction
[Outline your company’s business and your vision for its

4. future.]
[Introduce the company and its business. What is your vision
for the future of the business? What do you hope to achieve?
Where do you see the company in five years or ten?]
Purpose
[Explain the purpose of the report and what you hope to convey
about the company and its financials.]
[What do you plan to communicate, and why should your
investors pay attention? In other words, try to persuade your
investors that the accounting information you are about to share
is important.]
Methods and Approach
[Explain some management accounting methods you used to
determine your costing strategy, evaluate your financial
information, etc., and explain how these methods support the
mission and vision of the company.]
[Briefly describe how your report and the data it represents
adheres to industry standards and the AICPA code of ethics. In
other words, why should your investors trust that you are
delivering accurate financial data and that your decision-making
process has been ethical?]
Financial Strategy
[In this section, review your original business plan and costing
strategies. Remove this note before you submit your paper.]
Costing System

5. [Outline why the job order costing system works best for your
business. Explain in detail the use of job order costing for this
business. Be sure to compare and contrast the various costing
systems you learned about in this course as part of your
defense.]
Selling Prices
[List the selling price you chose for each product.]
[Explain and defend the selling prices you established for each
product. Why did you choose these prices? Be sure to reference
your cost-volume-profit analysis in your defense]
Contribution Margin
Milestone Two - Contribution Margin Analysis

6. COLLARS
LEASHES
HARNESSES
Sales Price per Unit
$ 20.00
$ 22.00
$ 25.00
Variable Cost per Unit

7. 9.10
12.10
14.60
Contribution Margin
$ 10.90
$ 9.90
$ 10.40

8. [Share and explain your contribution margin per unit. How did
you arrive at these numbers? Be sure to reference your cost-
volume-profit analysis in your defense.]
Target Profits
Milestone Two - Break-Even Analysis
COLLARS
LEASHES

9. HARNESSES
Sales Price
$ 20.00
$ 22.00
$ 25.00
Fixed Costs
$ 4,028

10. $ 4,028
$ 4,202
Contribution Margin
$ 10.90
$ 9.90
$ 10.40
Break-Even Units (round up)

11. 370.00
407.00
405.00
$ 369.57
$ 406.90
$ 404.01

12. Target Profit
$ 300.00
$ 400.00
$ 500.00
Break-Even Units (round up)
397.00
448.00
453.00

13. $ 397.06
$ 447.31
$ 452.08
Target Profit
$ 500.00
$ 600.00
$ 650.00

14. Break-Even Units (round up)
416.00
468.00
467.00
$ 415.44
$ 467.51
$ 466.51

15. [Specify the break-even points you determined for achieving
different target profit levels. Then, explain and defend the
target profits you selected for each area of your business. Be
sure to reference your cost-volume-profit analysis in your
defense.]
Financial Statements
[This section is designed to have you assess your financial
performance to date. Remove this note before you submit your
paper.]
Statement of Cost of Goods Sold
Milestone Three - Statement of Cost of Goods Sold

16. Beginning Work in Process Inventory
0
Direct Materials:
Materials: Beginning
0
Add: Purchases for month of January
$ 20,000

17. Materials available for use
20,000
Deduct: Ending materials
4,000
Materials Used
$ 16,000

18. Direct Labor
8,493
Overhead
3,765
Total Costs
$ 28,258
Deduct: Ending Work in Process Inventory
0

19. Cost of Goods Sold
$
28,258.33
[Compare the actual cost of goods sold over the last month and
evaluate the company’s performance against the budgeted
benchmarks. Are the numbers close to what you expected?
Interpret the performance and explain what happened.]
Income Statement
Milestone Three - Income Statement

20. Revenue:
Collars
$ 400
Leashes
440
Harnesses
500

21. Total Revenue:
$ 1,340
Cost of goods sold
28,258
Gross profit
$ 29,598
Expenses:

22. General and administrative salaries
$ 2,450
Depreciation
165
Rent
700
Utilities and insurance
600
Scissors, thread, and cording

23. $ 1,200.00
Loan
550
Total Expenses
$
5,665.00
Net Income/Loss
$
23,933.00

24. [Based on your income statement, logically interpret the
business’s performance against the provided benchmarks. Did
the company do as well as expected? Explain what happened.]
Variances
Milestone Three - Variance Analysis

25. Data for Variance Analysis:
Budgeted (Standard)
Hours/Qty
Budgeted (Standard)
Rate
Actual
Hours/Qty
Actual
Rate

26. Labor
160
$ 16.00
180
$ 16.50

27. Materials
600
$ 9.10
660
$ 10.00
Variances for Collar Sales

28. Variance
Favorable/
Unfavorable
Direct Labor Time Variance
(Actual Hours - Standard Hours) x Standard Rate
$ 320.00
Unfavorable

29. Direct Labor Rate Variance
(Actual Rate - Standard Rate) x Actual Hours
$ 90.00
Unfavorable
Direct Materials Quantity/Efficiency Variance
(Actual Quantity - Standard Quantity) x Standard Price

30. $ 546.00
Unfavorable
Direct Materials Price Variance
(Actual Price - Standard Price) x Actual Quantity
$ 594.00
Unfavorable

31. [Illustrate the variances observed between the planned and
actual values for the direct labor time and the direct materials
price for collars. What changed?]
Significance of Variances
[Share a summary of your variance analysis. Were the variances
favorable or unfavorable?]
[Evaluate the significance of the variances. Are the variances
favorable or unfavorable? What does it mean? Explain whether
and how your evaluation will affect your budgeting and
planning decisions for the next month or quarter.]
References
[Include any references cited in your paper in full APA format.
Don’t forget to include in-text citations as well.]