Question
Operational Costs Data : You plan to open a small business for manufacturing pet collars, leashes, and harnesses. You have found a workshop space you
Operational Costs Data :
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 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
o3 collars per yard of webbing
o2 leashes per yard of webbing
o2 harnesses per yard of webbing
Polyester/nylon ribbons$9 per yard of ribbon
o3 collars per yard of webbing
o2 leashes per yard of webbing
o2 harnesses per yard of webbing
Buckles made of cast hardware$0.50 per buckle
o4 buckles used per collar
o3 buckles used per leash
o8 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
- Instructions :
- Cost Classification.Accurately classify all your costs in the "Cost Classification" tab of your workbook./excel spreadsheet
- Identify direct material, direct labor, overhead, and period costs. (Note: Fixed and variable costs have been classified for you.)
- Variable and Fixed Costs.Complete the "Variable and Fixed Costs" tab of your spreadsheet. (.)
- Determine your total variable cost per unit and the total fixed costs for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started