For the following problems, I know the answers I just need to confirm my working, please show your working for all questions, Correct answers please!!!
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: $8,493.33
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
Owner salary: $500
Depreciation: $165
Rent: $750
Utilities and insurance: $600
Scissors, thread, and cording: $1,200
Loan repayment: $550
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..
Milestone Two - Contribution Margin Analysis COLLARS LEASHES HARNESSES Sales Price per Unit S 28.00 S 30.00 S 35.00 Variable Cost per Unit 9.10 12.10 14.60 Contribution Margin S 18.90 S 17.90 S 20.40Milestone Two - Break-Even Analysis COLLARS LEASHES HARNESSES Sales Price S 28.00 S 30.00 S 35.00 Fixed Costs 4,028 S 4,028 S 4,202 Contribution Margin S 18.90 S 17.90 S 20.40 Break-Even Units (round up) 213.14 225.05 206.00 Also, you can use the ROUNDUP Excel function for these units. Target Profit S 300.00 S 400.00 S 500.00 Break-Even Units (round up) S 229.01 247.39 230.00 Target Profit S 500.00 S 600.00 S 650.00 Break-Even Units (round up) 239.59 247.39 238.00Milestone Three - Statement of Cost of Goods Sold Beginning Work in Process Inventory Direct Materials: Materials: Beginning 0 Add: Purchases for month of January Materials available for use Deduct: Ending materials Materials Used Direct Labor Overhead Total Costs Deduct: Ending Work in Process Inventory 0 Cost of Goods SoldMilestone Three - Income Statement Revenue: Collars S Leashes Harnesses Total Revenue: 5 Cost of goods sold Gross profit Expenses: General and administrative salaries S Depreciation Rent 1 Utilities and insurance Scissors, thread, and cording Loan Total Expenses S Net Income/Loss SMilestone Three - Variance Analysis Data for Variance Analysis: Budgeted Budgeted Actual Actual (Standard) (Standard) Hours/Qty Rate Hours/Qty Rate Labor Materials Variances for Collar Sales Favorable/ Variance Unfavorable Direct Labor Time Variance (Actual Hours - Standard Hours) x Standard Rate Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours S Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price Direct Materials Price Variance (Actual Price - Standard Price) x Actual QuantityA B C D E F 2 Milestone One - Variable and Fixed Costs I W Collars Item Variable Cost/Item Item Fixed Costs 9 High-tensile strength nylon webbing 4.00 Collar maker's salary (monthly) 2,773.33 10 Polyesterylon ribbons 3.00 Depreciation on sewing machines 55.00 11 Buckles made of cast hardware 2.00 Rent 250.00 12 Price tags 0.10 Utilities and insurance 200.00 13 Scissors, thread, and cording 400.00 14 Loan payment 183.33 15 Salary to self 166.67 16 17 19 Total Variable Costs per Collar $ 9.10 Total Fixed Costs $ 4,028.33 20 22 23 Leashes 25 Item Variable Cost/Item Item Fixed Costs 27 High-tensile strength nylon webbing 6.00 Leash maker's salary (monthly) 2,773.33 28 Polyesterylon ribbons 4.50 Depreciation on sewing machines 55.00 in in to un 29 Buckles made of cast hardware 1.50 Rent 250.00 30 Price tags 0.10 Utilities and insurance 200.00 31 Scissors, thread, and cording 400.00 32 Loan payment 183.33 33 Salary to self 166.67 34 Cost Classification Variable and Fixed Costs Contribution Margin Analysis Break-Even Analysis COGS Type here to search O ECA B C D E F G H 2 3 Milestone Two - Contribution Margin Analysis 4 5 6 COLLARS LEASHES HARNESSES 8 Sales Price per Unit S 28.00 30.00 S 35.00 9 Variable Cost per Unit 9.10 12.10 14.60 11 Contribution Margin S 18.90 S 17.90 S 20.40 12 14 15 16 17_' i i Milestone Two - Break-Even Analysis 3 4 I I:| cows & w Z Sales Price 5 23.00 5 30.00 5 35.00 i i Wests i A Contribution Margin 5 18.90 5 17.90 5 20.40 E i BreakEven Units [round up] 14 i i Target Prot 5 300.00 5 400.00 3 500.00 3 3 Men Units [round up: 20 i E Target Prot 5 500.00 5 500.00 5 650.00 i i BreakEven Units [round up] _ if? g A g 31 l {'1 D M "M m I 133 JX A B C D 2 Milestone Three - Statement of Cost of Goods Sold 3 6 Beginning Work in Process Inventory 0 7 Direct Materials: 8 Materials: Beginning 0 9 Add: Purchases for month of January $ 20,000 11 Materials available for use 20,000 12 Deduct: Ending materials 4,000 14 Materials Used $ 16,000 15 16 Direct Labor 8,493 17 Overhead 3,765 19 Total Costs 28,258 20 21 Deduct: Ending Work in Process Inventory 0 22 23 Cost of Goods Sold 28,258.00 24 25 26 27 28 2910 Total Revenue: 11 Cost of goods sold 12 Gross profit 14 LDDQHU'ILH-li-WHI-'k 15' 16 1? 13 2D 21 22 23 24 25' 2E 22' 29 I Milestone Three - Income Statement Revenue: Collars Leashes Harnesses Expenses: General and administrative salaries Depreciation Rent Utilities and insurance Scissors, thread, and cording Loan Total Expenses Net IncomefLoss ., Ill A B C D E F 5 Data for Variance Analysis: Budgeted Budgeted Actual Actual (Standard) (Standard) Hours/Qty Rate 6 Hours/Qty Rate 7 8 Labor 160 $ 17.08 180 16.50 9 10 11 Materials 240 9.10 300 S 10.00 12 13 14 15 Variances for Collar Sales Favorable/ 16 Variance Unfavorable 17 Direct Labor Time Variance 18 (Actual Hours - Standard Hours) x Standard Rate 341.60 Unfavorable 19 20 Direct Labor Rate Variance 21 (Actual Rate - Standard Rate) x Actual Hours (104.40) Unfavorable 22 23 Direct Materials Quantity/Efficiency Variance 24 (Actual Quantity - Standard Quantity) x Standard Price $ 546.00 Unfavorable 25 26 Direct Materials Price Variance 27 (Actual Price - Standard Price) x Actual Quantity 5 270.00 Unfavorable 28 29 30 Cost Classification Variable and Fixed Costs Contribution Margin Analysis Break-Even Analy2. (30) Consider an economy with production. A representative consumer has Cobb- Douglas utility function U(x, y) = x . y' and 12 units of labor L. A consumer owns a representative firm X that produces good x with production function x = 4VL, and one representative firm Y that produces y with production function y = 2\\Ly, where Lx and Ly are the labor inputs of the two firms. Without loss of generality, we can normalize the wage rate of labor to 1. Denote the prices of good r and good y as Pr and Py, respectively. In this economy, there are three markets. The consumer supplies his labor to the two firms, receives his wage as workers and two firms' profits as the owners of the two firms, and consumes the products of the two firms. Questions (a) - (c) guild you to find the general equilibrium in this economy. (a) (10) Given Pr, Py, and the normalized wage 1 per unit of labor, find two firms' demand functions for labors, supply functions for good r and good y, and their profit functions. (b) (10) Find the consumer's demand functions for good r and good y. Note that a representative consumer owns one firm X and one firm Y. (c) (5) Provide all three market-clearing conditions and find the general equilibrium prices Pr and Py and equilibrium allocation (amounts of good r and good y pro- duced and consumed, and two firms' labor inputs in the general equilibrium). (d) (5) Find the Pareto efficient allocation (amounts of good r and good y, and how to divide the 12 units of labor in the two productions) by providing the optimization problem for the Pareto efficient allocation and solving the problem, and compare it to the general equilibrium outcome from part (c)
