Milestone One - Cost Classification INSTRUCTIONS: Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. The Fixed and Variable cost classifications have been provided for you. Item/Cost Direct Material Direct Labor Period Costs Fixed Variable Overhead Salary Collar maker Salary Leash maker Salary Harness maker Salary Receptionist High-tensile strength nylon webbing X X X Polyester/nylon ribbons Buckles made of cast hardware Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Price tags Office supplies Other business equipment Loan payment Salary to self X X X X X X X X X X X X X X X X X X X Milestone One - Variable and Fixed Costs Collars Item High-tensile strength nylon webbing Polyester/nylon ribbons Buckles made of cast hardware Price tags Variable Cost/Item $ 4.00 $ 3.00 $ 2.00 Item Collar maker's salary (monthly) Depreciation on sewing machines Rent Fixed Costs $2,773.33 $ 55.00 $ 250.00 $ 0.10 Utilities and insurance $ 200.00 Scissors, thread, and cording $ 400.00 Loan payment $ 183.33 Salary to self $ 166.67 Total Variable Costs per Collar 9.1 Total Fixed Costs 4,028.33 Leashes Item Variable Cost/Item High-tensile strength nylon webbing Polyester/nylon ribbons Buckles made of cast hardware Price tags Item Fixed Costs 6 Leash maker's salary (monthly) 2,773.33 4.5 Depreciation on sewing machines 55 1.5 Rent 250 0.1 Utilities and insurance 200 Scissors, thread, and cording 400 Loan payment 183.33 Salary to self 166.67 Total Variable Costs per Leash 12.1 Total Fixed Costs 4,028.33 Harnesses Item Variable Cost/Item High-tensile strength nylon webbing Polyester/nylon ribbons 6 4.5 Item Harness maker's salary Depreciation on sewing machines Fixed Costs 2,946.67 55 Buckles made of cast hardware Price tags 4 0.1 Rent 250 Utilities and insurance. 200 Scissors, thread, and cording 400 Loan 183.33 Salary to self 166.67 Total Variable Costs per Harness 14.6 Total Fixed Costs 4,021.67 Milestone Two - Contribution Margin Analysis Sales Price per Unit Variable Cost per Unit Contribution Margin COLLARS 20 9.1 LEASHES 30 12.1 HARNESSES 35 14.6 10.9 17.9 20.4 Milestone Two - Break-Even Analysis COLLARS LEASHES HARNESSES Sales Price 20 30 35 Fixed Costs 4,028 4,028 4,202 Contribution Margin 10.9 17.9 20.4 Break-Even Units (round up) 370 226 206 Target Profit 300 400 500 Break-Even Units (round up) 398 248 231 Target Profit 500 600 650 Break-Even Units (round up) 416 259 238 Milestone Three - 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 0 0 20,000 20,000 4,000 16,000 8,493 3,765 28,258 28,258 Milestone Three - 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 13,200 10,800 14,000 1,950 200 150 38,000 28,258 9,742 2,300 7,442 Milestone Three - Variance Analysis Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate Labor Materials Variances for Collar Sales Direct Labor Time Variance (Actual Hours - Standard Hours) x Direct Labor Rate Variance (Actual Rate - Standard Rate) x Ac Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quant Direct Materials Price Variance (Actual Price - Standard Price) x A Variance 0 0 0 0 Favorable/ Unfavorable