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 A Use the given operational costs in the Milestone One Operational Costs Data Appendix Word Document to complete the first two tabs. "Cost Classification" and "Variable and Fixed Costs," in the Project Workbook Spreadsheet. Specifically, you must address the following rubric criteria: Cost Classification. Accurately classify all your costs in the "Cost Classification" tab of your workbook. 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 workbook. (Note: Some costs are provided for you. Fill in only the missing costs. 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. Guidelines for Submission Submit the Project Workbook with the "Cost Classification" and "Fixed and Variable Costs" tabs completed. This file should be completed and submitted using Microsoft Excel 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 3 collars per yard of webbing o2 leashes per yard of webbing o 2 harnesses per yard of webbing Polyester/nylon ribbons-$9 per yard of ribbon o 3 collars per yard of ribbon o2 leashes per yard of ribbon 0 2 harnesses per yard of ribbon Buckles made of cast hardware-$0.50 per buckle 4 buckles used per collar 9 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 (5- year life, zero salvage value) Utilities and insurance: $600 per month; allocate based on square footage Scissors, thread, cording: $1,200 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 o 3 collars per yard of webbing o 2 leashes per yard of webbing 2 harnesses per yard of webbing Polyester/nylon ribbons-$9 per yard of ribbon o 3 collars per yard of ribbon o2 leashes per yard of ribbon 2 harnesses per yard of ribbon Buckles made of cast hardware-$0.50 per buckle D 4 buckles used per collar o 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 (5- year 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 Salary drawn of $500 per month 8 5 INSTRUCTIONS: 6 Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs 7 The Fixed and Variable cost classifications have been provided for you. B 9 Item/Cost 12 Salary-Collar maker 13 Salary-Leash maker: 14 Salary-Harness maker 15 Salary-Receptionist 16 High-tensile strength nylon webbing 17 Polyester/nylon ribbons 18 Buckles made of cast hardware 19 Depreciation on sewing machines 20 Rent 21 Utilities and insurance 22 Scissors, thread, and cording 23 Price tags 24 Office supplies 25 Other business equipment 26 Loan payment 27 Salary to self 28 Ready 77F Direct Material 0 Direct Labor Overhead Period Costs Fixed Variable xxxx X x x x x xxx x Cost Classification Variable and Foxed Costs Contribution Margin Analysis Break-Even Analysis COGS Income A Milestone One - Variable and Fixed Costs Collars Item B Variable Cost/Item 4.00 High-tensile strength nylon webbing S Polyester/nylon ribbons Buckles made of cast hardware Price tags Total Variable Costs per Collar Leashes Item High-tensile strength nylon webbing 3 Polyester/nylon ribbons 9 Buckles made of cast hardware Price tags 1 23456 88 Total Variable Costs per Leash 89 41 D Item Collar maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self Total Fixed Costs Variable Cost/Item Item Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Lpayment Salary to self Total Fixed Costs Fixed Costs $ 2,773.33 183.33 166.67 Fixed Costs 42 Harnesses Cost Classification Variable and Fixed Costs Contribution Margin Analysis Break-E 19 Total Variable Costs per Collar 20 22 23 Leashes 25 Item 27 High-tensile strength nylon webbing. 28 Polyester/nylon ribbons 29 Buckles made of cast hardware 30 Price tags 31 32 33 34 35 36 38 Total Variable Costs per Leash 39 41 42 Harnesses 44 Item Total Fixed Costs Variable Cost/Item Item 46 High-tensile strength nylon webbing 47 Polyester/nylon ribbons 48 Buckles made of cast hardware 49 Price tags 50 51 52 53 54 55 57 Total Variable Costs per Harness 58 60 Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self Fixed Costs Total Fixed Costs Variable Cost/Item Item Harness maker's salary Depreciation on sewing machines Rent rities and insurance Schtsors, thread, and cording Loan Salary to self Total Fixed Costs Fixed Costs S Cost Classification Variable and Fixed Costs Contribution Margin Analysis Break-Ev Milestone Two Contribution Margin Analysis B Sales Price per Unit 9 Variable Cost per Unit 1 Contribution Margin 2 4 15 16 17 18 COLLARS LEASHES HARNESSES Sales Price Fixed Costs L Contribution Margin 2 B Break-Even Units (round up) 4 6 7 Target Profit 8 9 Break-Even Units (round up) 22 23 Target Profit 24 25 Break-Even Units (round up) 26 28 COLLARS $ $ $ S LEASHES $ $ $ HARNESSES $ 300.00 $ 400.00 500.00 S 500.00 $ 600.00 $ 650.00 - 2 Milestone Three Statement of Cost of Goods Sold 3 4 6 Beginning Work in Process Inventory 7 8 9 11 12 14 Direct Materials: Materials: Beginning Add: Purchases for month of January Materials available for use Deduct: Ending materials Materials Used 15 Direct Labor 16 Overhead 18 Total Costs 19 20 Deduct: Ending Work in Process Inventory 21 22 Cost of Goods Sold 23 24 25 55 26 22 s 0 A B Milestone Three - Income Statement 5 Revenue: 5 Collars , Leashes B Harnesses 9 10 Total Revenue: 1 Cost of goods sold 12 Gross profit 13 14 Expenses: $ 15 General and administrative salaries $ 16 Office supplies 17 Other business equipment 18 19 Total Expenses 20 21 Net Income/Loss 9012346 22 26 27 B D E $ $ 34 5 Data for Variance Analysis: 6 7 8 Labor 9 10 11 Materials 12 13 14 15 Variances for Collar Sales 16 17 Direct Labor Time Variance 18 Budgeted Budgeted (Standard) Hours/Qty (Standard) Actual Hours/Qty Actual Rate Rate 19 (Actual Hours - Standard Hours) x Standard Rate 20 Direct Labor Rate Variance 21 22 (Actual Rate - Standard Rate) x Actual Hours Favorable/ Variance Unfavorable $ S 23 Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price S 24 25 26 Direct Materials Price Variance 27 28 (Actual Price - Standard Price) x Actual Quantity S