Explain and defend the selling prices that you established for each product in your pet supply store. Why did you choose these selling prices? Be sure to reference your cost-volume-profit analysis in your defense.
Milestone Two - Contribution Margin Analysis COLLARS LEASHES HARNESSES Sales Price per Unit Variable Cost per Unit Contribution Margin $20.00 $9.10 $10.80 $22.00 $12.10 $25.00 14.60 $9.90 $10.40 collars $9.10-$20.00 = $10.80 Leashes $12.10 -$22.00 = $9.90 Harnesses $14.60 - $25.00 = $10.40 COLLARS LEASHES HARNESSES Sales Price $ 20.00 $ 22.00 $ 25.00 Fixed Costs $ 4,028 $ 4,089 $ 4,266 Contribution Margin $ 10.80 $ 9.90 $ 10.40 Break-Even Units (round up) 370 Units 413 Units 410 Units Target Profit $ 300.00 $ 400.00 $ 500.00 Break-Even Units (round up) 397.00 453.00 458.00 Target Profit $ 500.00 $ 600.00 $ 650.00 Break-Even Units (round up) 415.00 474.00 473.00 Milestone Three - Statement of Cost of Goods Sold S $ Beginning Work in Process Inventory Direct Materials: Materials: Beginning Add: Purchases for month of January Materials available for use Deduct: Ending materials Materials Used Direct Labor Overhead Total Costs 0 20,000 20,000 4,000 16,000 8,493 3,765 28,258 $ Deduct: Ending Work in Process Inventory 0 Cost of Goods Sold $ 28,258 Milestone Three - Income Statement Revenue: Collars Leashes Harnesses 12,880 10,880 14,000 $ Total Revenue: Cost of goods sold Gross profit 37,680 28,258 9,422 $ $ Expenses: General and administrative salaries Office supplies Other business equipment 1,950 200 150 Total Expenses $ 2,300.00 Net Income/Loss $ 7,122.00 Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate Labor 8*20days = 160$ 16.00 9*20 = 180 $ 16.50 Materials 23 * 20 days = 460 $ 9.10 460 + 60 = 520 $ 10.00 Variances for Collar Sales Favorable/ Unfavorable Variance $ 320.00 Unfavorable $ 90.00 Unfavorable Direct Labor Time Variance (Actual Hours - Standard Hours) x Standard Rate (180-160) * (16) Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours (16.50-16) *(180) Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price (520-460) * 19.10) Direct Materials Price Variance (Actual Price - Standard Price) x Actual Quantity (10-9.10) * (520) $ 546.00 Unfavorable $ $ 468.00 Unfavorable
