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 $3320=660$ 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\mathrm{.}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.

Milestone Three $-$ Variance ff nalysis

Data for Variance Analysis:

Varlances for Collar Sales

Direct Labor Time Variance

$($Actual Hours $-$ Standard Hours$)$ Standard Rate

Direct Labor Rate Variance

$($Actual Rate $-$ Standard Rate$)$ 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