ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix

At the end of the first month of opening your business, you calculate the actual operating costs of the business and the income you earned. You also notice and document the difference in what you budgeted for certain materials and labor against the actual amounts you spent on the same.

For your statement of cost of goods sold, use the following data regarding the actual costs incurred by the business over the past month:

• Materials purchased: $20,000
  • Consumed 80% of the purchased materials
• Direct labor: $8,493
• Overhead costs: $3,765

Note: Assume that the beginning materials and ending work in process are zero for the month.

Use the following revenue and cost information for the income statement. Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Also, assume that after accounting for weekends and other holidays, there were 20 business days in the first month of operation.For example, if you chose a sales price of $20 per collar, the actual number of collars sold in the month was 33 per day or 33 x 20 = 660 per month.

The other costs incurred by the business include:

• General and administrative salaries
  • Receptionist: $1,950
• Office supplies: $200
• Other business equipment: $150

Variance

At the end of the month, you find that the labor and materials spent on manufacturing collars was different from what you estimated:

• The collar maker had to work nine hours a day instead of eight due to an increased demand for collars.
• Because of the increased demand, the hourly rate you paid your employee for making the collars increased to $16.50.
• An increase in the cost of raw material led the direct material cost per collar to increase to $10.
• However, you also made and sold 60 more collars than you expected to sell in the month.

You now need to determine the variance in the materials and labor cost from what you estimated in Milestone Two based on the market research data.

LOHILHLUJN 10 11 12 13 14 15 16 17 19 20 22 23 25 27 28 29 30 31 32 33 34 35 36 38 39 41 42 44 46 47 48 49 50 51 52 53 54 55 57 58 60 61 Milestone One - Variable and Fixed Costs Collars Item Variable Cost/Item High-tensile strength nylon webbing $ 4.00 Polyesterylon ribbons 5 3.00 Buckles made ofcast hardware 5 0.13 Price tags 5 0.10 Total Variable Costs per Collar S 1.23 Leashes Item Variable Cost/Item High-tensile strength nylon webbing S 5.00 Polyesterylon ribbons S 4.50 Buckles made ofcast hardware $ 0.17 Price tags $ 0.10 Total Variable Costs per Leash S 10.7? Harnesses Item Variable Cost/Item High-tensile strength nylon webbing S 6.00 Polyesterylon ribbons $ 4.50 Buckles made of cast hardware $ 0.06 Price tags 5 0.10 :1 Total Variable Costs per Harness S 10.66 Variable and Fixed Costs Ready 73 Accessibility: Good to go Item Collar maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self Total Fixed Costs Item Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self Total Fixed Costs Item Harness maker's salary Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan Salary to self Total Fixed Costs Contribution Margin Analysis Break-Even Analysis I mmmmmmm S mmmwmmm Fixed Costs 2,773.33 55.00 250.00 200.00 400.00 133.33 166.67 4,028.33 Fixed Costs 2,773.33 55.00 250.00 200.00 400.00 183.33 165.67 4,028.33 Fixed Costs 2,945.65 55.00 250.00 200.00 400.00 183.33 165.67 4,201.66 N 3 Milestone Two - Contribution Margin Analysis 4 5 6 COLLARS LEASHES HARNESSES 8 Sales Price per Unit 14.46 S 21.54 S 21.32 9 Variable Cost per Unit 7.23 10.77 10.66 11 Contribution Margin $ 7.23 S 10.77 S 10.66 12 14 15 16 17 18H Milestone Two - Break-Even Analysis W N UT COLLARS LEASHES HARNESSES Sales Price 14.46 21.54 S 21.32 8 9 Fixed Costs 4,028 S 4,028 4,202 10 11 Contribution Margin 7.23 10.77 10.66 12 13 Break-Even Units (round up) 557.00 374.00 394.00 14 16 17 Target Profit $ 300.00 S 400.00 S 500.00 18 19 Break-Even Units (round up) 600.00 413.00 442.00 20 22 23 Target Profit 500.00 $ 600.00 un 650.00 24 25 Break-Even Units (round up) 628.00 431.00 456.00 26 28 29 301 2 Milestone Three - Statement of Cost of Goods Sold 3 4 6 Beginning Work in Process Inventory ur 7 Direct Materials: 8 Materials: Beginning 0 9 Add: Purchases for month of January 11 Materials available for use 12 Deduct: Ending materials 14 Materials Used 15 Direct Labor 16 Overhead 18 Total Costs 19 20 Deduct: Ending Work in Process Inventory 0 21 22 Cost of Goods Sold 23 24 25