It has now been one month since you launched your business. You are meeting with a few investors soon to share your vision for the company and to ask for more funding. You will be sharing your company’s financial health at this meeting. To do that, you need to determine and analyze your company’s performance over the last month using the data provided.

Prompt

Use the information in the Milestone Three Actual Costs and Revenue Data Appendix to evaluate your company’s performance, and complete the remaining tabs in the Project Workbook that you used for the Milestone One and Two assignments.

Specifically, you must address the following rubric criteria:

• Statement of Cost of Goods Sold: Prepare the statement of cost of goods sold in the “COGS” tab of the workbook. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
• Income Statement: Use the given revenue data to prepare the “Income Statement” tab table and calculate the net income. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
• Variance Analysis: Prepare the data in the “Variances” tab to determine whether the variances are favorable or unfavorable. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
  • Complete the data table for the variances by entering the budgeted (standard) and actual labor and material values. Remember to use the estimates for expected sales from your Milestone Two assignment.
  • Determine the variances for direct labor and direct materials in the “Variances” tab.
  • Evaluate the significance of the variances in the “Variances” tab, and mark them as favorable or unfavorable.

• ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix

  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 Three - Income Statement Revenue: Collars $ 660 Leashes 616 Harnesses 625 Total Revenue: $ 1,901 Cost of goods sold Gross profit 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 %24