Question
Milestone Two: Market Research Data Collars With pricing at $12 per collar, with 33 sold per day Leashes With pricing at $14 per leash, with
Milestone Two: Market Research Data
Collars
With pricing at $12 per collar, with 33 sold per day
Leashes
With pricing at $14 per leash, with 28 sold per day
Harnesses
With pricing at $20 per harness, with 25 sold per day.
Prepare an Income statement, statement of goods sold and variance based off this information and information provided below:
- 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.
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.
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