Overview: In the second milestone of your final project, you will complete your

Question

Overview: In the second milestone of your final project, you will complete your pre-opening strategy. You must analyze the cost behaviors and systems of your industry and then conduct the relevant financial calculations to determine appropriate costing solutions. Be sure to use your work from Milestone One to inform your analysis and proposals Scenario: Prior to Opening, Part lI: Your market research indicated the following price ranges as optimal for your area: Dog Day Care o o o With pricing at $18 per dog per day, you can expect to have 22 dogs per day. With pricing at $20 per dog per day, you can expect to have 15 dogs per day. With pricing at $25 per dog per day, you can expect to have 10 dogs per day. Overnight Boarding o o o With pricing at $25 per dog per day, you can expect to have 12 dogs per day. With pricing at $28 per dog per day, you can expect to have 10 dogs per day. With pricing at $30 per dog per day, you can expect to have 7 dogs per day Basic Groom o o o With pricing at $25 per groom, you can expect to do 5 grooms per day. With pricing at $30 per groom, you can expect to do 4 grooms per day. With pricing at $35 per groom, you can expect to do 3 grooms per day. Additionally, you need to compare your break-even points for the following target profits for each area of your business: Day Care o o o Break-even $417 target profit each month $667 target profit each month Boarding o o o Break-even $583 target profit each month $909 target profit each month

Explanation / Answer

The Dog House

Step-1: Milestone 2- Contribution per unit and Contribution Margin Ratio:

Particulars

Day Care

Boarding

Grooming

Selling Price Per unit

$18

$25

$25

Variable Cost Per unit

$4.65

$7.36

$9.97

Contribution Margin

$13.35

$17.64

$15.03

Step-2:Milestone2-Break –Even Analysis:

Particulars

Day care

Boarding

Grooming

Sale price

$396

$300

$125

Fixed Cost(A)

$858.44

$1378.99

$2367.92

Contribution Margin(B)

$13.35

$17.64

$15.03

Break-Even Units (round up)=Fixed Costs/Contribution Margin(A/B)

65

79

158

Target Profit

$417

$583

$1000

Target Profit and Fixed Cost

$1275

($858.44+$417)

$1962

$3368

Break Even units(Round up)

(T.P+F.C)/Contribution Margin

96

112

224

Target Profit

$667

$909

$1500

T.P and F.C.

$1526

$2288

$3868

Break Even units (Round up)

115

130

258

Particulars

Day Care

Boarding

Grooming

Selling Price Per unit

$18

$25

$25

Variable Cost Per unit

$4.65

$7.36

$9.97

Contribution Margin

$13.35

$17.64

$15.03

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