Directions

8- to 10-page Word document. Sources should be cited according to APA style. Submit a detailed report to your potential investors and other stakeholders to explain and defend your costing strategies and to share your business's performance to date. Your report can be in the form of a PowerPoint presentation or a Word document (based on the templates provided in the What to Submit section). In either format, be sure to effectively communicate with your stakeholders by breaking down concepts and using investor-friendly language to build their trust and confidence. If you choose to do a PowerPoint presentation, you'll need to include speaker notes for each slide.

1. Introduction: Provide a short overview of your company and the purpose of this report.
   1. Business Overview: Name your company and describe its business and your vision for its future.
   2. Purpose of the Report: Explain the purpose of the report and describe why the information is important.
   3. Methods and Approach: Explain the management accounting methods you used for generating the information that you are about to share in terms of your adherence to industry standards and the American Institute of Certified Public Accountants (AICPA) code of ethics.
2. Financial Strategy: Review your original business plan and costing strategies.
   1. Costing System: Justify the use of job order costing for this business. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense.
   2. Selling Prices: Share and explain the selling prices you established for each of your products. Be sure to reference your cost-volume-profit analysis in your defense.
   3. Contribution Margin: Share and explain your contribution margin per unit. Be sure to reference your cost-volume-profit analysis in your defense.
   4. Target Profits: Identify your break-even points for achieving different target profits. Then explain the target profits you selected for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense.
3. Financial Statements: Using the information in the Milestone Two Market Research Data Appendix, assess your financial performance to date.
   1. Statement of Cost of Goods Sold: Share the statement of cost of goods sold and logically interpret the business's performance against the provided benchmarks.
   2. Income Statement: Share the income statement and logically interpret the business's performance against the provided benchmarks.
   3. Variances: Illustrate all variances for the direct labor time and the materials price.
   4. Significance of Variances: Evaluate the significance of the variances in terms of the potential to impact future budgeting decisions and planning

Milestone One - Cost Classification
INSTRUCTIONS:
Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs.
The Fixed and Variable cost classifications have been provided for you.
Item/Cost	Direct Material	Direct Labor	Overhead	Period Costs	Fixed	Variable
Salary - Collar maker		x				x
Salary - Leash maker		x				x
Salary - Harness maker		x				x
Salary - Receptionist				x
High-tensile strength nylon webbing	x					x
Polyester/nylon ribbons	x					x
Buckles made of cast hardware	x					x
Depreciation on sewing machines			x		x
Rent			x		x
Utilities and insurance			x		x
Scissors, thread, and cording			x		x
Price tags	x					x
Office supplies				x
Oter business equipment				x
Loan payment			x		x
Salary to self			x		x

Milestone One - Variable and Fixed Costs
Collars
Item	Variable Cost/Item		Item	Fixed Costs
High-tensile strength nylon webbing	$ 4.00		Collar maker's salary (monthly)	$ 2,773.33
Polyester/nylon ribbons	$ 3.00		Depreciation on sewing machines	$ 55.00
Buckles made of cast hardware	$ 2.00		Rent	$ 250.00
Price tags	$ 0.10		Utilities and insurance	$ 200.00
			Scissors, thread, and cording	$ 400.00
			Loan payment	$ 183.33
			Salary to self	$ 166.67
Total Variable Costs per Collar	$ 9.10		Total Fixed Costs	$ 4,028.33
Leashes
Item	Variable Cost/Item		Item	Fixed Costs
High-tensile strength nylon webbing	$ 6.00		Leash maker's salary (monthly)	$ 2,773.33
Polyester/nylon ribbons	$ 4.50		Depreciation on sewing machines	$ 55.00
Buckles made of cast hardware	$ 1.50		Rent	$ 250.00
Price tags	$ 0.10		Utilities and insurance	$ 200.00
			Scissors, thread, and cording	$ 400.00
			Loan payment	$ 183.33
			Salary to self	$ 166.67
Total Variable Costs per Leash	$ 12.10		Total Fixed Costs	$ 4,028.33
Harnesses
Item	Variable Cost/Item		Item	Fixed Costs
High-tensile strength nylon webbing	$ 6.00		Harness maker's salary	$ 2,946.67
Polyester/nylon ribbons	$ 4.50		Depreciation on sewing machines	$ 55.00
Buckles made of cast hardware	$ 4.00		Rent	$ 250.00
Price tags	$ 0.10		Utilities and insurance	$ 200.00
			Scissors, thread, and cording	$ 400.00
			Loan	$ 183.33
			Salary to self	$ 166.67
Total Variable Costs per Harness	$ 14.60		Total Fixed Costs	$ 4,201.67

Milestone Two - Contribution Margin Analysis
	COLLARS		LEASHES		HARNESSES
Sales Price per Unit	$ 15.00		$ 20.00		$ 20.00
Variable Cost per Unit	9.10		12.10		14.60
Contribution Margin	$ 5.90		$ 7.90		$ 5.40

	Milestone Two - Break-Even Analysis
		COLLARS		LEASHES		HARNESSES
	Sales Price	$ 15.00		$ 20.00		$ 20.00
	Fixed Costs	$ 4,028		$ 4,028		$ 4,202
	Contribution Margin	$ 5.90		$ 7.90		$ 5.40
	Break-Even Units (round up)	683.00		510.00		779.00
	Target Profit	$ 300.00		$ 400.00		$ 500.00
	Break-Even Units (round up)	734.00		561.00		871.00
	Target Profit	$ 500.00		$ 600.00		$ 650.00
	Break-Even Units (round up)	768.00		586.00		899.00

Milestone Three - Statement of Cost of Goods Sold
Beginning Work in Process Inventory		0
Direct Materials:
Materials: Beginning	0
Add: Purchases for month of January	$ 20,000
Materials available for use	20,000
Deduct: Ending materials	(4,000)
Materials Used		$ 16,000
Direct Labor		8,493
Overhead		3,765
Total Costs		$ 28,258
Deduct: Ending Work in Process Inventory		0
Cost of Goods Sold		$ 28,258.33

Milestone Three - Income Statement
Revenue:
Collars	$ 12,880
Leashes	10,800
Harnesses	14,000
Total Revenue:		$ 37,680
Cost of goods sold		(28,258)
Gross profit		$ 9,422
Expenses:
General and administrative salaries	$ 2,450
Depreciation	165
Rent	750
Utilities and insurance	600
Scissors, thread, and cording	$ 1,200.00
Loan	550
Total Expenses		$ 5,715.00
Net Income/Loss		$ 3,706.67

Milestone Three - Variance Analysis
Data for Variance Analysis:
	Budgeted (Standard) Hours/Qty	Budgeted (Standard) Rate	Actual Hours/Qty	Actual Rate
Labor	160	$ 14.67	180	$ 16.50
Materials	6,188	$ 3.23	1,600	$ 10.00
Variances for Collar Sales
			Variance	Favorable/ Unfavorable
Direct Labor Time Variance
(Actual Hours - Standard Hours) x Standard Rate		$ 293.34	Unfavorable
Direct Labor Rate Variance
(Actual Rate - Standard Rate) x Actual Hours		$ 329.94	Unfavorable
Direct Materials Quantity/Efficiency Variance
(Actual Quantity - Standard Quantity) x Standard Price	$ (14,828.42)	Favorable
Direct Materials Price Variance
(Actual Price - Standard Price) x Actual Quantity		$ 10,828.80	Unfavorable