I need help figuring out cost of goods sold, income statement, and variances

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

1

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.

Break even analysis Collars Sales price 28 Fixed cost 4028 Contribution Margins 18.90 Break even units round up 213 Leashes Sales Price 30 Fixed cost 4028.33 Contribution Margins 1790 Break even units round up 225 Harness Sales price 35 Fixed cost 4201.67 Contribution margins 20.4 Break even units round up 206 Target profit collars 300 Target profit leashes 400 Target profit harnesses 500 Break even units collars 240 Break even units leashes 259 Break even units harnesses 238 Contribution margin analysis Sales price per unit collar 28, Leashes 30, harnesses 35 Variable cost per unit collar 9.10, leashes 12.10, harnesses 14.60 Contribution margin collar 18.90, leashes 17.90, harnesses 20.4