Overview The next step in planning for your new business is to analyze the cost behaviors and systems of your industry and conduct the relevant nancial calculations to determine appropriate costing solutions. In this milestone assignment, you will conduct a break-even analysis to determine your target prots and the selling price you plan to use to achieve these prots for each product. Prompt Use information from Milestone One and the provided Milestone Two Market Research Data Appendix Word Document to conduct a cost volume prot analysis. Complete the \"Contribution Margin Analysis" and \"BreakEven Analysis\" tabs in the mject Workbook Spreadsheet that you used for completing the Milestone One assignment. Specically, you must address the following rubric criteria: . Contribution Margin. Determine your contribution margin per unit in the "Contribution Margin Analysis" tab. 0 Choose a sales price for each product. 0 Calculate the contribution margin for each product based on your sales price and the variable cost for that product. Show your work using calculations to the side of the table or using appropriate formulas in the table. . Break-Even Analysis. Use cost-volume-prot (CVP) analysis to determine your brea k-even points for achieving your target prots in the \"Brea k-Even Analysis" tab. 0 Determine the break-even points for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table. 0 Determine break-even units for the suggested target prots for each product. Show your work using calculations to the side of the table or using appropriate formulas in the table. Milestone Two: Market Research Data You have conducted some market research for style and size of products you want to use to launch your business. The market research has indicated the following sales price ranges will be optimal for your area depending on style of products you choose to sell: 0 Collars 0 With pricing at $20 per collar, you can expect to sell 30 collars per day. 0 With pricing at $24 per collar, you can expect to sell 25 collars per day. 0 With pricing at $28 per collar, you can expect to sell 20 collars per day 0 Leashes 0 With pricing at $22 per leash, you can expect to sell 23 leashes per day. 0 With pricing at $26 per leash, you can expect to sell 23 leashes per day. 0 With pricing at $30 per leash, you can expect to sell 13 leashes per day. 0 Harnesses 0 With pricing at $25 per harness, you can expect to sell 25 harnesses per day. 0 With pricing at $30 per harness, you can expect to sell 22 harnesses per day. 0 With pricing at $35 per harness, you can expect to sell 20 harnesses per day. Additionally, you will need to compare your break-even points for the following target profits for each area of your business to determine your prices: 0 Collars o Break-even 0 $300 target profit each month 0 $500 target profit each month I Leashes o Break-even 0 $400 target profit each month 0 $500 target profit each month 0 Harnesses o Break-even 0 $500 target profit each month 0 $550 target profit each month Remember that all break-even and target points must be in whole units (we cannot sell a partial unit). Round up when calculating partial units to ensure costs are covered. Excel tip use ROUNDUP function INSTRUCTIONS: Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. The Fixed and Variable cost classifications have been provided for you. Direct Direct Item/Cost Material Labor Overhead Period Costs Fixed Variable X X Salary - Collar maker Salary - Leash maker X X Salary - Harness maker X X Salary - Receptionist X High-tensile strength nylon webbing X X Polyesterylon ribbons X X X 8 Buckles made of cast hardware X Depreciation on sewing machines X X X Rent X Utilities and insurance X X Scissors, thread, and cording X X -.... X X Price tags Office supplies X Other business equipment X X Loan payment X Salary to self X X - . . . . ..A lj L U l: l' Item Variable Cost/Item Item Fixed Costs Hightensile strength nylon webbing S 4.00 Collar maker's salary (monthly) S 2,723.33 I Polyesterfnylon ribbons S 3.00 Depreciation on sewing machines S 55.00 . Buckles made of cast hardware S 2.00 Rent S 250.00 1 Price tags S 0.10 Utilities and insurance S 200.00 Scissors, thread, and cording S 400.00 Loan payment S 183.33 . Salary to self S 166.6? I Total Variable Costs per Collar S 9.10 Total Fixed Costs 5 4,028.33 . Leashes . Item Variable Cost/Item Item Fixed Costs ' Hightensile strength nylon webbing S 6.00 Leash maker's salary (monthly) S 2,560.00 : Polyesterylon ribbons S 4.50 Depreciation on sewing machines S 55.00 I Buckles made of cast hardware S 1.50 Rent S 250.00 I Price tags S 0.10 Utilities and insurance S 200.00 Scissors, thread, and cording S 400.00 Loan payment S 183.33 Salary to self S 166.6? : Total Variable Costs per Leash 5 12.10 Total Fixed Costs 5 3,815.00 : Harnesses - Item Variable Cost/Item Item Fixed Costs i Hightensile strength nylon webbing S 6.00 Harness maker's salary S 2,720.00 ' Polyesterfnylon ribbons S 4.50 Depreciation on sewing machines S 55.00 : Buckles made of cast hardware S 4.00 Rent S 250.00 I Price tags S 0.10 Utilities and insurance S 200.00 I Scissors, thread, and cording S 400.00 Loan S 183.33 Salary to self S 166.67 I l l:.' Total Variable Costs per Harness 5 14.60 Total Fixed Costs 5 3,975.00 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 rooms is 1,500 square feet broken into three areas (500 square feet each}. You have taken out a loan for sta rt-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 0 One collar maker, who will be paid $16.00 per hour and work 40 hours per week 0 One leash maker, who will be paid $16.00 per hour and work 40 hours per week 0 One harness maker, who will be paid $1100 per hour and work 40 hours per week 0 One receptionist, who will be paid $15.00 per hour and work 30 hours per week Other Costs 0 Rent: $750 per month; allocate based on square footage o High-tensile strength nylon webbing$12 per yard of webbing o 3 collars per yard of webbing o 2 leashes per yard of webbing o 2 harnesses per yard of webbing o Polyesterylon ribbons$9 per yard of ribbon o 3 collars per yard of ribbon o 2 leashes per yard of ribbon o 2 harnesses per yard of ribbon o Buckles made of cast hardware$0.50 per buckle o 4 buckles used per collar 0 3 buckles used per leash o 8 buckles used per harness o 3 industrial sewing machines at $3,300 each for a total of $9,900; depreciation is $165 per month (5- year life, zero salvage value} 0 Utilities and insurance: $600 per month; allocate based on square footage o Scissors, thread, cording: $1,200 0 Price tags: 5250 for 2,500I ($0.10 each) 0 Office supplies: $2,400 or $200 per month 0 Other business equipment: $2,000 0 Loan payment of $550 per month 0 Salary drawn of $500 per month Milestone Two - Contribution Margin Analysis COLLARS LEASHES HARNESSES Sales Price per Unit Variable Cost per Unit Contribution MarginMilestone Two - Break-Even Analysis COLLARS LEASHES HARNESSES Sales Price S S S Fixed Costs S S Contribution Margin S 5 S Break-Even Units (round up) Target Profit S 300.00 S 400.00 S 500.00 Break-Even Units (round up) Target Profit $ 500.00 600.00 S 650.00 Break-Even Units (round up)