Milestone Three - Income Statement Revenue: Collars Leashes Harnesses Total Revenue: Cost of goods sold Gross profit Expenses: Overview Successful entrepreneurs understand all aspects of business, especially costs and costing systems. In the course project, you will assume the role of the owner of a small business and apply managerial accounting principles to evaluate and manage costs related to your services within a costing system. In the first milestone of the project, you will determine and dassify the costs necessary for opening your business. Scenario You plan to open a business manufacturing collars, leashes, and harnesses for pets. To begin, you will manufacture these in a standard style and size with plans to expand your range over the year. In a few weeks, you will present your company's financial strategy to some key investors. To begin creating your strategy, you need to consider and record all the costs associated with operating your business. You have decided to use the job order costing system. Prompt Use the siven operational costs in the Milestone One OperationalCosts: Data Apsendix Word Document to complete the first two tabs, "Cost Classification" and 'Varlable and Fixed Costs; in the Proiect Workbook Soreadaheet. Specifically you must address the following rubeic criterlas - Cost Classification. Accurately classify all your costs in the 'Cost Classification' tab of your workbook. - Identify dinect materlat, direct laboc, overhead, and period costs. (Note: Fixed and varlable costs have been classified for you.) - Variable and Fixed Costs. Complete the "Varlable and Flixed Coste't tab of your workbook. (Note: Some costs are provided for you. Fill in only the mising costs) - Determine your totai variable cost per unit and the total foced costs for each product. Show your work using calculatlons to the side of the table or using asproprlate formulas in the table. What to Submit Submit the fr oject Warkbook with the 'Cost Classification' and Fixed and Variable Costs' tabs completed. This file should be completed and submizted usins Microsoft Excet. ACC 202 Milestone One: Operational Costs Data Appendix You 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 roorns 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 hamess 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 - 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 ribbon - 2 leashes per yard of ribbon - 2 harnesses per yard of ribbon - 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 (5vear life, zero salvage value) - 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 - Salarv drawn of $500 per month Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overnead, or Period Costs. The Fixed and Variable cost classifications have been prowided for you. Milestone Three - Variance Analysis Data for Variance Analysis: Variances for Collar Sales Direct Labor Time Variance (Actual Hours - Standard Hours) x Standard Rate Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price Direct Materials Price Variance (Actual Price - Standard Price) x Actual Quantity