ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix Variance At the end of the month, you find that the labor and materials spent on manufacturing collars was At the end of the first month of opening your business, you calculate the actual operating costs of the different from what you estimated: 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. The collar maker had to work nine hours a day instead of eight due to an increased demand for collars. For your statement of cost of goods sold, use the following data regarding the actual costs incurred by Because of the increased demand, the hourly rate you paid your employee for making the the business over the past month: collars increased to $16.50. An increase in the cost of raw material led the direct material cost per collar to increase to $10. Materials purchased: $20,000 However, you also made and sold 60 more collars than you expected to sell in the month. o Consumed 80% of the purchased materials Direct labor: $8,493.33 You now need to determine the variance in the materials and labor cost from what you estimated in . Overhead costs: $3,765 Milestone Two based on the market research data. 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. Established Sales Price Number of Items Sold per Day Collars $20 33 $24 28 $28 23 Leashes $22 28 $26 23 $30 18 Harnesses $25 25 $30 22 $35 20 The other costs incurred by the business include: General and administrative salaries Receptionist: $1,950 o Owner salary: $500 Depreciation: $165 . Rent: $750 . Utilities and insurance: $600 Scissors, thread, and cording: $1,200 Loan repayment: $5501 2 Milestone Three - Statement of Cost of Goods Sold 3 4 6 Beginning Work in Process Inventory 7 Direct Materials: Materials: Beginning 9 Add: Purchases for month of January 11 Materials available for use 12 Deduct: Ending materials 14 Materials Used 15 16 Direct Labor 17 Overhead 19 Total Costs 20 21 Deduct: Ending Work in Process Inventory 0 22 23 Cost of Goods Sold 24 25A B C D 1 2 Milestone Three - Income Statement 3 5 Revenue: Collars S 7 Leashes Harnesses 9 10 Total Revenue: 5 11 Cost of goods sold 12 Gross profit 13 14 Expenses: 15 General and administrative salaries 16 Depreciation 17 Rent 18 Utilities and insurance 19 Scissors, thread, and cording 20 Loan 21 22 Total Expenses S 23 24 Net Income/Loss S 25 26 27 291 Milestone Three - Variance Analysis 4 5 Data for Variance Analysis: Budgeted Budgeted Actual Actual (Standard) (Standard) Hours/Qty Rate 6 Hours/Qty Rate 3 Labor 9 10 11 Materials 12 13 14 15 Variances for Collar Sales Favorable/ 16 Variance Unfavorable 17 Direct Labor Time Variance 18 (Actual Hours - Standard Hours) x Standard Rate S 19 20 Direct Labor Rate Variance 21 (Actual Rate - Standard Rate) x Actual Hours S 22 23 Direct Materials Quantity/Efficiency Variance 24 (Actual Quantity - Standard Quantity) x Standard Price S 25 26 Direct Materials Price Variance 27 (Actual Price - Standard Price) x Actual Quantity S 28 29
