ACC $202$ Milestone One: Operational Costs Data Appendix

You plan to open a small business for manufacturing pet collars, leashes, and harnesses. You have found a workshop space you can use for sewing your products. After some research and planning, you have estimates for the various operating costs for your business.

The total square footage for the sewing rooms is $1,500$ square feet broken into three areas $(500$ square feet each$).$ You have taken out a loan for start$-$up costs, and the monthly payment is $$550$; it goes into effect immediately and should be accounted for in your costs. You will also collect a modest salary for the first year of $$500$ per month; remember to divide evenly among the services.

Salary and Hiring Data

$$ One collar maker, who will be paid $$16\mathrm{.}00$ per hour and work $40$ hours per week

$$ One leash maker, who will be paid $$16\mathrm{.}00$ per hour and work $40$ hours per week

$$ One harness maker, who will be paid $$17\mathrm{.}00$ per hour and work $40$ hours per week

$$ One receptionist, who will be paid $$15\mathrm{.}00$ per hour and work $30$ hours per week

Other Costs

$$ Rent: $$750$ per month; allocate based on square footage

$$ High$-$tensile strength nylon webbing$$$$12$ per yard of webbing

o $3$ collars per yard of webbing

o $2$ leashes per yard of webbing

o $2$ harnesses per yard of webbing

$$ Polyester$/$nylon ribbons$$$$9$ per yard of ribbon

o $3$ collars per yard of ribbon

o $2$ leashes per yard of ribbon

o $2$ harnesses per yard of ribbon

$$ Buckles made of cast hardware$$$$0\mathrm{.}50$ per buckle

o $4$ buckles used per collar

o $3$ buckles used per leash

o $8$ buckles used per harness

$3$ industrial sewing machines at $$3,300$ each for a total of $$9,900$; depreciation is $$165$ per month $(5-$year life, zero salvage value$)$

$$ Utilities and insurance: $$600$ per month; allocate based on square footage

$$ Scissors, thread, cording: $$1,200$

$$ Price tags: $$250$ for $2,500($$$0\mathrm{.}10$ each$)$

$$ Office supplies: $$2,400$ or $$200$ per month

$$ Other business equipment: $$2,000$

$$ Loan payment of $$550$ per month

$$ Salary drawn of $$500$ per month

Contribution Margin Analysis

$-$ Sales price per unit of Collars $$63\mathrm{.}00,$ Leashes $$115\mathrm{.}00,$ Harness $$592\mathrm{.}00$

$-$ Variable cost per unit Collars $\_\_\_\_\_\_\_$ Leashes $\_\_\_\_\_\_\_\_$ Harness$\_\_\_\_\_\_$

$-$ Contribution Margin of Collars $\_\_\_\_\_\_\_$ Leashes $\_\_\_\_\_\_\_\_$ Harness$\_\_\_\_\_\_$

Break Even Analysis

Sales price: Collars $$63\mathrm{.}00,$ Leashes $$115\mathrm{.}00,$ Harness $$592\mathrm{.}00$

Fixed Cost: Collars $\_\_\_\_\_\_\_$ Leashes $\_\_\_\_\_\_\_\_$ Harness$\_\_\_\_\_\_$

Contribution Margin: Collars $$54\mathrm{.}00,$ Leashes $$103\mathrm{.}00,$ Harness $$577\mathrm{.}50$

Target Profit: Collars $$300\mathrm{.}00,$ Leashes $$400,$ Harness $$500$

Break Even Units $($Round up$)$: Collars $\_\_\_\_\_\_\_$ Leashes $\_\_\_\_\_\_\_\_$ Harness$\_\_\_\_\_\_$

Target profit: Collars $$500\mathrm{.}00,$ Leashes $$600\mathrm{.}00,$ Harness $$650\mathrm{.}00$

Statement of Cost of Goods sold

Beginning Work in Process Inventory

Direct Materials:

Materials: Beginning

Add: Purchases for month of January

Materials available for use

Deduct: Ending materials

Materials Used

Direct Labor

Overhead

Total Costs

Deduct: Ending Work in Process Inventory

Cost of Goods Sold

Income Statement

Revenue:

Collars

Leashes

Harnesses

Total Revenue:

Cost of goods sold

Gross profit

Expenses:

General and administrative salaries

Office supplies

Other business equipment

Total Expenses

Net Income$/$Loss

Variance analysis

Budgeted $($Standard$)$

Hours$/$Qty Budgeted $($Standard$)$

Rate Actual

Hours$/$Qty Actual

Rate

Labor

Material

Variance Favorable$/$Unfavorable

Variances for Collar Sales

Direct Labor Time Variance

$($Actual Hours $-$ Standard Hours$)$ x Standard Rate

Direct Labor Rate Variance

$($Actual Rate $-$ Standard Rate$)$ x Actual Hours

Direct Materials Quantity$/$Efficiency Variance

$($Actual Quantity $-$ Standard Quantity$)$ x Standard Price

Direct Materials Price Variance

$($Actual Price $-$ Standard Price$)$ x Actual Quantity