Golden Wolves Statue Company *

Corey had always dreamed of starting his own manufacturing company. Now that he was in an Entrepreneurship class and in his senior year as a Business Major at Alvernia University, he decided that it was about time that he took the first step in realizing his dream. Corey had recently won $100,000 in the lottery. He thought he might have an idea to help him test his business skills while he was still in school and develop a project that could grow after he graduated.

Corey decided to start a small business to manufacture resin Golden Wolf statues to sell to students and alumni at Alvernia and the local community now that Alvernia had announced a new logo for its sports teams. He planned to make a small and a large statue of a golden wolf in profile and a third large version of the golden wolf statue that faced front. If this venture was successful, he figured he could expand with more statues and other products.

Corey incorporated Golden Wolves Statue Company as a Pennsylvania corporation and went looking for a small loft apartment he could use for all of his manufacturing facility. He decided he would use an extra room in his apartment as his office space so that he didn't need to use the loft for office space and would be solely devoted to manufacturing. Corey was in luck, he found a perfect one-bedroom apartment with a one-year lease that was not far from school, so he could even work between classes.

The rent was only$600 per month. Corey decided to open his business on January 1 of the following year.

He would use the $100,000 of lottery winnings as the initial capital investment and pay himself $500.00 per month.

Cost Classification (Milestone #1)

Corey knew that he wanted to be able to show a small profit in his business and, recalling his BUS 101 Financial Accounting course and his BUS 200 Managerial Accounting courses from his first year at Alvernia, he decided to start by collecting a chart of all of the items that he would need to buy or have on hand for the statue making business.

The owner of a local statue manufacturing facility was retiring and offered to sell Corey the manufacturing equipment that he needed to make resin statues for $5,000. He also had packaging equipment that he was willing to sell for another $2,000. The packaging equipment would automatically fold the boxes, drop the statue into its box (large statues in the large boxes and small statues in the small boxes) and fold in the top of the boxes. The statues would be ready to ship at that point.

Corey decided that he would start out by making the two profile statues plain. He would add a t-shirt with the Alvernia Golden Wolves logo to the large, forward-facing statue.

He paid an artist in Philadelphia $2,500 to create three molds for the three different resin statues and contracted with a friend of his family to manufacture the t-shirts printed with the Alvernia logo.

Corey hired two friends to work for him. Carl would manufacture the resin statues using the three molds created by the artist. Julie had far less time available for work and would work only on the forward-facing statue to outfit them with the Alvernia t-shirt.

Corey knew a PhD student who agreed to supervise Carl and Julie for $100 a month since he could still work on his dissertation while he was supervising. Corey also hired a former soccer teammate who had graduated to be the Accountant for the business to keep the books, although he also intended to ask his accounting professor for advice.

All of Golden Wolves Statue Company's cost drivers are listed in the Cost and Materials Information Table.

For Milestone #1, please classify all of the costs in the various columns in the table labeled Milestone 1.

To complete the table, please work in the following order:

Step1: Choose Product Cost or Period Cost for all cost drivers.

Step 2: If the cost driver is a product cost, choose Direct Material, Direct Labor or Manufacturer's Overhead.

Step3: Choose Fixed or Variable Cost

Step 4: Choose Direct or Indirect Cost

Cost and Materials Information

Equipment, Materials and other Costs	Cost	Standard per Statue
Resin Molds	$ 2,500	N/A
Processing Machine	$ 5,000	N/A
Packaging Machine	$ 2,000	N/A
Golden Wolves Logo T-shirts	$ 75 for 100	1
Resin	$ 100 for 25 pounds	1 lb for small statues and 2 lbs for large statues
Small Packaging box	$ 12.50 for 50 boxes	1 box for each small statue
Large Packaging box	$ 20 for 50 boxes	1 box for each large statue
Business Licenses	$ 200/year
Rent	$ 600/year
IPad Point of Sale System	$ 1,000
Point of Sale Software	$ 30/month
Utilities (gas, electric and water)	$ 60/month
Business Cell Phone	$ 80/month
Salary - Corey	$ 500/month
Carl's Pay	$ 10/hour	20 minutes per statue for all statues
Julie's Pay	$ 10/hour	5 minutes per large forward- facing statue for t-shirt placement
Accountant's pay	$ 200/month
Supervisor's pay	$ 100/month

Milestone 1: Classification of Costs

	Product	Period	Direct Material	Direct Labor	Mfg's Overhead	Fixed	Variable	Direct	indirect
Resin Mold
Processing Machine
Packaging Machine
Golden Wolves Logo T-shirts
Resin
Small Packaging boxes
Large Packaging boxes
Business Licenses
Rent
IPad Point of Sale System
Point of Sale Software
Utilities (gas, electric and water)
Business Cell Phone	X				X	X			X
Salary - Corey
Carl's pay
Julie's pay
Accountant's pay
Supervisor's pay