both variable & fixed cost exercises
VARIABLE & FIXED COSTS Determine your per unit cost per dog for grooming, day care and boarding OPERATIONAL & COST INFORMATION: For simplicity, base all calculations using 30 days in each month OPERATIONAL DATA Grooming: The Groomer can groom 5 dogs a day, 5 days a week Each grooming takes 1.5 labor hours Day Care: The Day Care can house 10 large dogs and 12 small dogs daily. Day Care is offered 6 days a week Boarding: There are 12 kennels (single dog only). Boarding (kennel services) is offered every day Facilities: The Grooming facility is 200 square feet The Boarding facility is 2,500 square feet The Day Care facility is 1,500 square feet General: Loan for start-up costs - monthly payment of $420; in effect immediately; limited cash and loan funding - used angel investors Modest monthly draw of $600 a month for rst year; should be divided evenly amoung the services (grooming, day care, boarding) SALARY & HIRING DATA Groomer (Allison) - $12.00 an hour, 40 hours a week Day Care Attendant (Beverly) - $9.00 per hour, based on need Receptionist (Cathie) - $8.50 per hour, 30 hours a week Kennel Attendant (Ben) - $11.50 per hour, based on need OTHER COST DATA Grooming: Dog Groor Grooming Table - $900 Grooming Tub - $2,800 Clippers - $136.99; can be used for 100 grooms Shampoo - $103.96 per S-gallon pail; can be used for 100 grooms Salon Tu' Capri Mobile Carry Cart - $90 Scissors ('7 inch straight) - $194.99; used for 200 grooms Scissors (ear and nose) - $7 .49; used for 200 grooms Day Care: Fencing for Day Care area - $1,249 Fencing Installation - $1,000 Toys - $3.29 per 6 pack; one toy will last for two dogs in day care per day Rubberized Flooring for Day Care - $3,800 Boarding: 12 Kennels; Depreciation is $80 per month General: Food & Water bowls - $3.59 per unit Day Care - two bowls last for every 75 dogs that attend daycare Boarding - two bowls last for every 100 dogs boarded; two bowls per kennel Grooming - each bowl lasts for 20 grooms and you need 4 bowls at all times Towels - $34.99 per 12 pack Day Care l2 towels for every 25 dogs Boarding - 12 towels for every 40 dogs Grooming - 2 towels for every groom per day Heating System - $10,000; Depreciation is $83 per month; Allocate based on square footage Rent - $650 per month; Allocate based on square footage Utilities 1' 1nsurance - $600 per month; Allocate based on square footage Cage Bank - $2,200 per set of 5 Dryer - $1,250 Cleaning Products Odoban - $14.55 per gallon; Each area wil dilute 1 oz to 1 gallon of water; Ailocate based on square footage Simple Green - $15.66 per gallon; Each area will dilute 1 oz to 1 gallon of water; Allocate based on square footage INSTRUCTIONS: Putting an X in the appropriate spot, classify the costs highlighted in yellow as: Direct Material, Direct Labor, Overhead, or Period Costs. Other costs have been provided for you. The fixed and variable cost classifications have been provided for you. For more information see Objective 1 in Chapter 5. Direct Direct Item/Cost Material Labor Overhead Period Costs Fixed Variable Groomer X Day care attendant X ...... Receptionist X Kennel attendant X X Food and water bowls X Depreciation on kennels X X Rent X Utilties and insurance X X Grooming tub 48' Depreciation on heating system X Clippers X X Shampoo (Crystal Clear: five-gallon pail) X Towels X X Scissors (7-inch straight, ear & nose) X X Toys (used in day care only) X Cleaning products (used throughout) X Dryer XXYZ Corporation MILESTONE l - Variable & Fixed Cost Exercise INSTRUCTIONS: Determine the per unit cost for each dog. Fill in the blanks to get the per unit cost and xed cost of each service. Based on 5 grooms per day GROOMING Item Variable Costs Shampoo Clippeds) Bowls Towels Scissors Total Variable Costs Groomer Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Total Fixed Costs Fixed Costs 2,367.91 Based on 22 dogs per day for six days a week. Assume 25 operating days for kennel and 22 eight-hour work days for kennel atte DAY CARE Item Variable Costs Day care attendant 2.88 Toys 0.27 Bowls 0.] Towels l .4 Total Variable Costs Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Total Fixed Costs Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant. BOARDING Item Variable Costs Kennel attendant Bowls Towels Total Variable Costs Depreciation on kennels Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Total Fixed Costs Fixed Costs Fixed Costs 1,378.97 Costs (Payments) for the Purpose of Generating Revenues Product Costs Period Costs Direct Materials Direct Labor Overhead Inventory (Balance Sheet) Cost of Selling and Goods Sold Admin Exp. (Income Statement) (Income Statement)
