looking for assistance on module 3 problems- cost of goods, income statement, and variances

Nou plan to open a small business for manufacturing pet collars, leashes, and harnesses. You have found a workshop space you can use for sewing your products. After some research and planning, you have estimates for the various operating costs for your business. The total square footage for the sewing rooms is 1,500 square feet broken into three areas (500 square feet each). You have taken out a loan for start-up costs, and the monthly payment is $550; it goes into effect immediately and should be accounted for in your costs. You will also collect a modest salary for the first year of $500 per month, remember to divide evenly among the services, . Salary and Hiring Data One collar maker, who will be paid $16.00 per hour and work 40 hours per week One leash maker, who will be paid $16.00 per hour and work 40 hours per week One harness maker, who will be paid $17.00 per hour and work 40 hours per week One receptionist, who will be paid $15.00 per hour and work 30 hours per week . . . Other Costs Rent: $750 per month; allocate based on square footage High-tensile strength nylon webbing-$12 per yard of webbing 0 3 collars per yard of webbing 2 leashes per yard of webbing 2 harnesses per yard of webbing Polyesterylon ribbons-$9 per yard of ribbon 3 collars per yard of webbing 2 leashes per yard of webbing 2 harnesses per yard of webbing Buckles made of cast hardware-$0.50 per buckle 4 buckles used per collar 3 buckles used per leash 8 buckles used per harness 3 industrial sewing machines at $3,300 each for a total of $9,900; depreciation is $165 per month (5- year life) Utilities and insurance: $600 per month; allocate based on square footage Scissors, thread, cording: $1,200 Price tags: $250 for 2,500 ($0.10 each) Office supplies: $2,400 or $200 per month Other business equipment: $2,000 Loan payment of $550 per month Salary drawn of $500 per month o . . COCUS 6 Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. 7 The Fixed and Variable cost classifications have been provided for you. 8 Direct Direct 9 Item/Cost Material Labor Overhead Period Costs Fixed Variable X ---- X 12 Salary - Collar maker 13 Salary - Leash maker 14 Salary - Harness maker 15 Salary - Receptionist 16 High-tensile strength nylon webbing 17 Polyesterylon ribbons 18 Buckles made of cast hardware 19 Depreciation on sewing machines ---- X X X 20 Rent 21 Utilities and insurance 22 Scissors, thread, and cording : x x x X X X X 23 Price tags 24 Office supplies 25 Oter business equipment 26 Loan payment 27 Salary to self 28 29 30 Cost Classification Variable and Fixed Posts NO 5 Collars Item ariable Costiltem 9 High-tensile strength nylon webb $ 4,00 10 Polyesterinylon ribbons $ 3,00 11 Buckles made of cast hardware 2.00 12 Price tags $ 0.10 15 14 15 16 17 19 Total Variable Costs per C$ 9.10 20 Item Fixed Costs Collar maker's salary (monthly) $ 2,560.00 Depreciation on sewing machine: $ 55.00 Rent $ 250.00 Utilities and insurance $ 200.00 Scissors, thread, and cording $ 400.00 Loan payment 1 183.33 Salary to sell 1 166.67 Total Fixed Costs $ 4,492.78 22 23 Leashes 25 Item ariable Costiltem 27 High-tensile strength nylon webb $ 6.00 28 Polyesterinylon ribbons $ 4.50 29 Buckles made of east hardware $ 1.50 30 Price tags $ 0.10 31 32 33 34 35 36 38 Total Variable Costs per L $ 12.10 Item Fixed Costs Leash maker's salary [monthly) 2,560.00 Depreciation on sewing machine: $ 55.00 Rent $ 250.00 Utilities and insurance $ 200.00 Scissors, thread, and cording $ 400.00 Loan payment $ 183.33 Salary to self $ 166.67 Total Fixed Costs $ 4,492.78 41 42 Harnesses 44 Item ariable Costiltem 46 High-tensile strength nylon webb $ 6.00 4.50 47 Polyester nylon ribbons 48 Buckles made of cast hardware $ 4.00 49 Price tags $ 0.10 50 51 52 53 54 55 57 Total Variable Costs per HS 14.60 58 Item Fixed Costs Harness maker's salary $ 2 720.00 Depreciation on sewing machine: $ 55.00 Rent $ 250.00 Utilities and insurance $ 200.00 Soissors, thread, and cording 400.00 180 GB Salary to sell 1166 67 Loan Total Fixed Costs 4.65278 4 5 6 COLLARS LEASHES HARNESSES $ $ 22.00 20.00 9.00 8 Sales Price per Unit 9 Variable Cost per Unit 11 Contribution Margin 12 12.00 25.00 14.50 $ 11.00 $ 10.00 $ 10.50 14 Milestone Two - Break-Even Analysis COLLARS LEASHES HARNESSES Sales Price $ 20.00 $ 22.00 $ 25.00 Fixed Costs $ 5,860 $ 5,860 $ 6,031 Contribution Margin $ 11.00 $ 10.00 $ 10.50 Break-Even Units (round up) 533.00 586.00 574.00 Target Profit $ 300.00 $ 400.00 $ 500.00 Break-Even Units (round up) 560.00 626.00 622.00 Target Profit $ 500.00 $ 600.00 $ 650.00 3 4 5 Break-Even Units (round up) 578.00 646.00 636.00 D 8 1 2 Milestone Three - Statement of Cost of Goods Sold 3 4 0 0 6 Beginning Work in Process Inventory 7 Direct Materials: 8 Materials: Beginning 9 Add: Purchases for month of January 11 Materials available for use 12 Deduct: Ending materials 14 Materials Used 15 16 Direct Labor 17 Overhead 0 19 Total Costs 20 21 Deduct: Ending Work in Process Inventory 22 23 Cost of Goods Sold 24 25 26 $ 1 $ $ - 1 2 Milestone Three - Income Statement 3 4 5 Revenue: 6 Collars 7 Leashes 8 Harnesses 9 10 Total Revenue: 11 Cost of goods sold 12 Gross profit 13 14 Expenses: 15 General and administrative salaries 16 Depreciation 17 Rent 18 Utilities and insurance 19 Scissors, thread, and cording 20 Loan 21 22 Total Expenses 23 24 Net Income/Loss 25 $ $ $ 4. 5 Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate 6 7 8 Labor 9 10 11 Materials 12 13 14 15 Variances for Collar Sales Variance Favorable/ Unfavorable $ $ 16 17 Direct Labor Time Variance 18 (Actual Hours - Standard Hours) Standard Rate 19 20 Direct Labor Rate Variance 21 (Actual Rate - Standard Rate) x Actual Hours 22 23 Direct Materials Quantity/Efficiency Variance 24 (Actual Quantity - Standard Quantity) Standard Price 25 26 Direct Materials Price Variance 27 (Actual Price - Standard Price) x Actual Quantity 28 29 Cost Classification Variable