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 companys financial health at this meeting. To do that, you need to determine and analyze your companys performance over the last month using the data provided.

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

• 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
• 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
• Office supplies: $200
• Other business equipment: $150

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 - Variance Analysis Milestone Three - Income Statement Milestone Three - Statement of Cost of Goods Sold Milestone Two - Break-Even Analysis \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Sales Price } & \multicolumn{2}{|c|}{ COLLARS } & \multicolumn{2}{|c|}{ LEASHES } & \multicolumn{2}{|c|}{ HARNESSES } \\ \hline & $ & - & $ & - & $ & - \\ \hline \multicolumn{7}{|l|}{ Fixed Costs } \\ \hline Contribution Margin & $ & - & $ & - & $ & \\ \hline \multicolumn{7}{|l|}{ Break-Even Units (round up) } \\ \hline \multicolumn{7}{|l|}{ Target Profit } \\ \hline \multicolumn{7}{|l|}{ Break-Even Units (round up) } \\ \hline \multicolumn{7}{|l|}{ Target Profit } \\ \hline Break-Even Units (round up) & & & & & & \\ \hline \end{tabular} Milestone Two - Contribution Margin Analysis \begin{tabular}{|c|c|c|c|} \hline & COLLARS & LEASHES & HARNESSES \\ \hline \begin{tabular}{l} Sales Price per Unit \\ Variable Cost per Unit \end{tabular} & & & \\ \hline Contribution Margin & & & \\ \hline \end{tabular} Milestone One - Variable and Fixed Costs Collars \begin{tabular}{lll} Item & \multicolumn{2}{c}{ Variable Cost/Item } \\ \hline High-tensile strength nylon webbing & $ & 4.00 \\ Polyesterylon ribbons & $ & 3.00 \\ Buckles made of cast hardware & $ & 2.00 \\ Price tags & $ & 0.10 \end{tabular} \begin{tabular}{lrr} Item & \multicolumn{2}{r}{ Fixed Costs } \\ \hline Collar maker's salary (monthly) & $ & 2,773.33 \\ Depreciation on sewing machines & $ & 55.00 \\ Rent & $ & 250.00 \\ Utilities and insurance & $ & 200.00 \\ Scissors, thread, and cording & $ & 33.33 \\ Loan payment & $ & 183.33 \\ Salary to self & $ & 166.67 \end{tabular} Total Variable Costs per Collar \begin{tabular}{ll} \hline$+ & 9.10 \\ \hline \end{tabular} Total Fixed Costs \begin{tabular}{ll} \hline$3,661.66 \\ \hline \end{tabular} Leashes \begin{tabular}{|c|c|c|c|c|c|} \hline Item & Var & st/Item & Item & & Costs \\ \hline High-tensile strength nylon webbing & $ & 6.00 & Leash maker's salary (monthly) & $ & 2,773.33 \\ \hline Polyesterylon ribbons & $ & 4.50 & Depreciation on sewing machines & $ & 55.00 \\ \hline Buckles made of cast hardware & $ & 1.50 & Rent & $ & 250.00 \\ \hline Price tags & $ & 0.10 & Utilities and insurance & $ & 200.00 \\ \hline & & & Scissors, thread, and cording & $ & 33.33 \\ \hline & & & Loan payment & $ & 183.33 \\ \hline & & & Salary to self & $ & 166.67 \\ \hline Total Variable Costs per Leash & $ & 12.10 & Total Fixed Costs & $ & 3,661.66 \\ \hline \end{tabular} Harnesses \begin{tabular}{lll} Item & \multicolumn{2}{c}{ Variable Cost/Item } \\ \hline High-tensile strength nylon webbing & $ & 6.00 \\ Polyesterylon ribbons & $ & 4.50 \\ Buckles made of cast hardware & $ & 4.00 \\ Price tags & $ & 0.10 \end{tabular} Item \begin{tabular}{|c|c|c|} \hline Item & \multicolumn{2}{|c|}{ Fixed Costs } \\ \hline Harness maker's salary & $ & 2,946.67 \\ \hline Depreciation on sewing machines & $ & 55.00 \\ \hline Rent & $ & 250.00 \\ \hline Utilities and insurance & $ & 200.00 \\ \hline Scissors, thread, and cording & $ & 33.33 \\ \hline Loan & $ & 183.33 \\ \hline Salary to self & $ & 166.67 \\ \hline \end{tabular} Total Variable Costs per Harness \begin{tabular}{ll} \hline$ & 14.60 \\ \hline \end{tabular} Total Fixed Costs \begin{tabular}{ll} \hline$3,835.00 \\ \hline \end{tabular}