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PART 1 ITEM Cost per Unit Classification Fabric $0.80 Product Interfacing $0.80 Product Hardware $0.80 Product Sewing Machine Monthly Cost Period Thread Monthly Cost Period
PART 1 ITEM Cost per Unit Classification Fabric $0.80 Product Interfacing $0.80 Product Hardware $0.80 Product Sewing Machine Monthly Cost Period Thread Monthly Cost Period Pliers One-time Cost Product Workspace Rental Monthly Cost Period Sales Venue Rental Monthly Cost Period Monthly Costs : Fabric and Interfacing: 60 hair tie per yard Hardware : 1 per hair tie Planing to make 500 hair tie in a month Fabric and Intefacing Cost :($0.80/1 hair tie )x500 hier tie Fabric and Interfacing Cost := $0.80 x500 1 :$400 Hardware Cost : $0.20x500 :$100.00 Total Product Costs Total Product costs : Fabric and Interfacing Cost + Hardaware Cost :$400+100 :$500 Monthly Period Cost : Sewing Machine , Thread ,Pliers, Wrokspace Renat, Sales Venue Rental Wok in Process (WIP) and Finished Goods Date Account Dr Cr devid WIP $500 Raw Materials inventory $400 (fabric and Interfacing) Raw Materials inventory $100 Work in Process Date Account Dr Cr finished goods inventory $500 Work in Process $500 finished goods Cost of Goods Sold Upon Sale Of key Fobs Date Account Dr Cr Cost Of Goods Sold $500 finished goods inventory $500 Cost Of Goods Sold Monthly Period Costs: Debit respective expense accounts (e.g., Sewing Machine Expense, Thread Expense, Rental Expense) for their monthly costs. Explanation: Period Costs: Costs associated with running the business that are not tied directly to the production of goods. Monthly costs like sewing machine usage, thread, and workspace rentals fall into this category. Upon selling the hair tie, the costs are transferred from Finished Goods to COGS. This process ensures proper accounting for the costs associated with manufacturing a product and the subsequent sale of that product. PART 2- Based on the CVP analysis, it is recommended we accept the special order. Profitable: The special order will generate a profit of $10,499.99, even after accounting for the 10% discount. This is because the variable cost per unit is only $2.40, and the special-order price is $4.50 per unit. Covers variable costs: Even if the special-order price did not cover all the fixed costs, it would still cover the variable costs. This means that the company would not lose money on each unit sold. Contributes to fixed costs: The special order will contribute $2,099.99 to cover the fixed costs. This is because the contribution margin per unit for the special order is $2.10. based on the CVP analysis it is recommended that accept the order. Summarizing the CVP analysis: Item Amount Normal selling price per unit $5.00 Special order price per unit $4.50 Variable cost per unit $2.40 Contribution margin per unit (normal) $2.60 Contribution margin per unit (special order) $2.10 Total fixed costs $400 Break-even point (normal) 153.85 units Break-even point (special order) 190.48 units Quantity of special order 5,000 units Profit from special order $10,499.99 Building relationships: Accepting the special order could help build a relationship with a new customer, which could lead to future business. Please use the previous data for develop the step part 3 PART 3- Writing assignment three - using the same information you've established previously, create a master budget for the next quarter. Please use excel for this one.
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