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: . o . Materials purchased: $20,000 Consumed 80% of the purchased materials Direct labor: $8,493.33 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. Number of Items Sold per Day 33 28 23 Established Sales Price Collars $20 $24 $28 Leashes $22 $26 $30 Harnesses $25 $30 28 23 18 25 22 | 20 . snhu 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. . 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: $550 2. Milestone Three - Variance Analysis 3 4 5 Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate 6 7 8 Labor 9 10 11 Materials 12 13 14 15 Variances for Collar Sales Favorable/ Unfavorable Variance 16 17 Direct Labor Time Variance 18 (Actual Hours - Standard Hours)x Standard Rate 19 20 Direct Labor Rate Variance 21 (Actual Rate - Standard Rate) * Actual Hours 22 23 Direct Materiais Quantity/Efficiency Variance 24 (Actual Quantity - Standard Quantity) Standard Price 25 26 Direct Materials Price Variance 27 (Actual Price - Standard Price) Actual Quantity 28 29 09 O