Overview: In the third milestone, you will jump forward in time: Imagine that your business has already opened. Use the updated scenario information to analyze your companys performance. Post-opening Scenario: Your angel investors are silent in relation to the business; however, they require board meetings for status updates on the companys financial health. Therefore, you need to analyze your companys performance over the last month using the data provided below. Note: Your instructor will create an announcement sharing the income statement data by the end of Module Four. All of the data you need for the cost-ofservices statement can be found in the COS Schedule tab of your workbook. For your variance analysis, use the following financial data:

Direct Materials/Labor Original Projection Actual

Shampoo 1000 ounces ($2/groom) 1200 ounces ($3/groom)

Grooming Labor 1.5 hrs/groom @ $12 2.25 hrs/groom @ $11.50

Prompt: Complete your work in the provided workbook by assessing your companys financial performance, specifically addressing the following critical elements:

? Financial Statements

? Create a statement of cost of services in the COS Schedule tab.

? Create an income statement in the Income Statement tab. ?

Variance Analysis

? Identify all variances for the direct labor time and the materials price in the Variances tab.

? Evaluate the significance of the variances in the Variances tab.

? Incorporate all feedback from previous milestones to finalize your workbook

Houston Precious Kennels

MILESTONE 3 - Statement of Cost of Services

INSTRUCTIONS:

The following are the actual numbers for January:

Materials

Purchased $5,000 of Materials

Consumed 40% of those purchased materials

Direct Labor

Direct Labor was $6,240

Factory Overhead

Factory Overhead was $2,800

Houston Precious Kennels

Statement of Cost of Services

For the Month Ended January 31, xxxx

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

-

Factory Overhead

-

Total Manufacturing Overhead

$ -

Deduct: Ending Work-in-Process Inventory

-

Cost of Services

$ -

Houston Precious Kennels

MILESTONE 3 - Income Statement

INSTRUCTIONS:

Complete the statement in proper form.

Revenue will be provided in an announcement at the end of Module 4

(based on actual number of services for your pricing levels).

Additional information necessary to complete the income statement:

General and Administrative Salaries paid = $1,200

Advertising = $100

Cleaning Products = $120

Depreciation = $83

Rent = $650

Loan = $420

Utilities and Insurance = $600

Houston Precious Kennels

Income Statement

For the Month Ended January 31, xxxx

Revenue:

Grooming

$ -

Day Care

-

Boarding

-

Total Revenue

$ -

Cost of Goods Sold *

-

Gross Profit

$ -

Expenses:

G&A Salaries

$ -

Advertising

-

Cleaning Products

-

Depreciation

-

Rent

-

Loan

-

Utilities and Insurance

-

Total Expenses

$ -

Net Income / Loss

$ -

* Cost of Goods Sold = Cost of Services (COS)

There is no finished goods inventory to maintain.

	Houston Precious Kennels
	MILESTONE 3 - Variance Analysis
	INSTRUCTIONS:
	Prepare the variances and identify whether they are favorable or unfavorable.
	The below website will provide further assistance with variances:
	http://accounting-simplified.com/management/variance-analysis/material/price.html
	DATA FOR VARIANCE ANALYSIS:
		Standard Hours / Qty	Standard Rate	Actual Hours / Qty	Actual Rate
	Grooming Labor	150	$ 12.00	180	$ 11.50
	Grooming Materials	1,000	$ 2.00	1,200	$ 3.00
				Variance	Favorable/ Unfavorable
	Groomer Direct Labor Time Variance
	(Actual Hours - Standard Hours) x Standard Rate			$ -
	Groomer Direct Labor Time Variance
	(Actual Rate - Standard Rate) x Actual Hours			$ -
	Groomer Direct Labor Time Variance
	(Actual Quantity - Standard Quantity) x Standard Price			$ -
	Groomer Direct Labor Time Variance
	(Actual Price - Standard Price) x Actual Quantity			$ -