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.

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

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.

Module Two info already completed:

The total square footage for the sewing rooms is 1,500 square feet broken into three areas (500 square feet each). You have taken out a loan for start-up costs, and the monthly payment is $550; it goes into effect immediately and should be accounted for in your costs. You will also collect a modest salary for the first year of $500 per month; remember to divide evenly among the services.

Salary and Hiring Data

One collar maker, who will be paid $16.00 per hour and work 40 hours per week

One leash maker, who will be paid $16.00 per hour and work 40 hours per week

One harness maker, who will be paid $17.00 per hour and work 40 hours per week

One receptionist, who will be paid $15.00 per hour and work 30 hours per week

Other Costs

Rent: $750 per month; allocate based on square footage

High-tensile strength nylon webbing$12 per yard of webbing

3 collars per yard of webbing

2 leashes per yard of webbing

2 harnesses per yard of webbing

Polyesterylon ribbons$9 per yard of ribbon

3 collars per yard of ribbon

2 leashes per yard of ribbon

2 harnesses per yard of ribbon

Buckles made of cast hardware$0.50 per buckle

4 buckles used per collar

3 buckles used per leash

8 buckles used per harness

3 industrial sewing machines at $3,300 each for a total of $9,900; depreciation is $165 per month (5-year life, zero salvage value)

Utilities and insurance: $600 per month; allocate based on square footage

Scissors, thread, cording: $1,200

Price tags: $250 for 2,500 ($0.10 each)

Office supplies: $2,400 or $200 per month

Other business equipment: $2,000

Loan payment of $550 per month

Salary drawn of $500 per month

Need help figuring out the COGS, Income Statement, and variances.

Milestone Two - Contribution Margin Analysis \begin{tabular}{l} 4 \\ 5 \\ 6 \\ \hline \end{tabular} 8 Sales Price per Unit 9 Variable Cost per Unit 11 Contribution Margin \begin{tabular}{rr} \multicolumn{2}{c}{ COLLARS } \\ \hline$ & 20.00 \\ & 9.10 \\ \hline$ & 10.90 \\ \hline \end{tabular} \begin{tabular}{rr} \multicolumn{2}{c}{ LEASHES } \\ \hline$ & 22.00 \\ & 12.10 \\ \hline$ & 9.90 \\ \hline \end{tabular} \begin{tabular}{cc} \multicolumn{2}{c}{ HARNESSES } \\ \hline$ & 25.00 \\ & 14.60 \\ \hline$ & 10.40 \\ \hline \end{tabular} 42 Harnesses Total Variable Costs per Harness \begin{tabular}{ll} \hline$14.60 \\ \hline \end{tabular} Total Fixed Costs \begin{tabular}{ll} \hline$ & 4,201.67 \\ \hline \end{tabular} Milectane Throe - Ctotemont af Conet af Gande Cald Milestone Three - Income Statement Data for Variance Analysis: \begin{tabular}{|l|c|c|c|c|} \hline \multirow{2}{*}{ Labor } & Budgeted (Standard) Hours/Qty & Budgeted (Standard) Rate & Actual Hours/Qty & Actual Rate \\ \cline { 2 - 5 } & & & & \\ \hline Materials & & & & \\ \hline \end{tabular} Variances for Collar Sales Direct Labor Time Variance (Actual Hours - Standard Hours) Standard Rate Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price Direct Materials Price Variance (Actual Price - Standard Price) x Actual Quantity Milestone Two - Contribution Margin Analysis \begin{tabular}{l} 4 \\ 5 \\ 6 \\ \hline \end{tabular} 8 Sales Price per Unit 9 Variable Cost per Unit 11 Contribution Margin \begin{tabular}{rr} \multicolumn{2}{c}{ COLLARS } \\ \hline$ & 20.00 \\ & 9.10 \\ \hline$ & 10.90 \\ \hline \end{tabular} \begin{tabular}{rr} \multicolumn{2}{c}{ LEASHES } \\ \hline$ & 22.00 \\ & 12.10 \\ \hline$ & 9.90 \\ \hline \end{tabular} \begin{tabular}{cc} \multicolumn{2}{c}{ HARNESSES } \\ \hline$ & 25.00 \\ & 14.60 \\ \hline$ & 10.40 \\ \hline \end{tabular} 42 Harnesses Total Variable Costs per Harness \begin{tabular}{ll} \hline$14.60 \\ \hline \end{tabular} Total Fixed Costs \begin{tabular}{ll} \hline$ & 4,201.67 \\ \hline \end{tabular} Milectane Throe - Ctotemont af Conet af Gande Cald Milestone Three - Income Statement Data for Variance Analysis: \begin{tabular}{|l|c|c|c|c|} \hline \multirow{2}{*}{ Labor } & Budgeted (Standard) Hours/Qty & Budgeted (Standard) Rate & Actual Hours/Qty & Actual Rate \\ \cline { 2 - 5 } & & & & \\ \hline Materials & & & & \\ \hline \end{tabular} Variances for Collar Sales Direct Labor Time Variance (Actual Hours - Standard Hours) Standard Rate Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price Direct Materials Price Variance (Actual Price - Standard Price) x Actual Quantity