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 companys 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.

Please help with following project

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 o 3 collars per yard of webbing o 2 leashes per yard of webbing o 2 harnesses per yard of webbing 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 Buckles made of cast hardware$0.50 per buckle o 4 buckles used per collar o 3 buckles used per leash o 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 . nun 4 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. 8 Direct Material Direct Labor 9 Item/Cost Overhead Period Costs Fixed Variable XXX XX 12 Salary - Collar maker 13 Salary - Leash maker 14 Salary - Harness maker 15 Salary - Receptionist 16 High-tensile strength nylon webbing 17 Polyesterylon ribbons 18 Buckles made of cast hardware 19 Depreciation on sewing machines 20 Rent 21 Utilities and insurance 22 Scissors, thread, and cording XXX XXX X X X X X X X X X X XIX i XX X X 23 Price tags X 24 Office supplies 25 Other business equipment 26 Loan payment 27 Salary to self 28 XX 29 30 31 5 Collars 7 Item 9. High-tensile strength nylon webbing 10 Polyesterylon ribbons 11 Buckles made of cast hardware 12 Price tags ariable Cost/Item $ 4.00 3.00 2.00 0.10 Item Collar maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to sell Fixed Costs $ 2,773.33 $ 55.00 $ 250.00 $ 200.00 $ 400.00 $ 183.33 $ 166.67 SIN 80: a = 8.vie Total Variable Costs per Col$ 9.10 Total Fized Costs $ 4,028.33 Fized Costs 22 23 Leashes 25 Item ariable Cost/Item 27 High-tensile strength nylon webbing $ 6.00 28 Polyesterylon ribbons $ 4.50 29 Buckles made of cast hardware $ 1.50 30 Price tags $ 0.10 31 32 33 34 35 36 38 Total Variable Costs per Lea $ 12.10 39 Item Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to sell Total Fixed Costs Fixed Costs 41 42 Harnesses 44 Item ariable Costiltem 46 High-tensile strength nylon webbing 47 Polyesterylon ribbons 48 Buckles made of cast hardware 49 Price tags 50 51 52 53 54 55 57 Total Variable Costs per Harness 58 60 Item Harness maker's salary Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan Salary to self Total Fixed Costs 2 2 3 Milestone Two - Contribution Margin Analysis 4 4 5 6 6 COLLARS LEASHES HARNESSES 8 Sales Price per Unit 9 Variable Cost per Unit 11 Contribution Margin 12 14 15 16 1 Milestone Two - Break-Even Analysis 2 3 4 5 COLLARS LEASHES HARNESSES 7 Sales Price $ $ $ 8 Fixed Costs $ $ $ Contribution Margin $ $ $ 9 10 11 12 13 14 Break-Even Units (round up) Target Profit $ 300.00 $ 400.00 $ 500.00 16 17 18 19 20 Break-Even Units (round up) Target Profit $ 500.00 $ 600.00 $ 650.00 22 23 24 25 26 Break-Even Units (round up) 1 $ 0 12 1 2 Milestone Three - Statement of Cost of Goods Sold 3 4 6 Beginning Work in Process Inventory 7 Direct Materials: 8 Materials: Beginning 9 Add: Purchases for month of January 11 Materials available for use Deduct: Ending materials 14 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 0 - $ 1 2 Milestone Three - Income Statement 3 4 5 Revenue: 6 Collars 7 Leashes 8 Harnesses 9 10 Total Revenue: 11 Cost of goods sold 12 Gross profit 1 1 - $ $ 13 $ 14 Expenses: 15 General and administrative salaries 16 Office supplies Other business equipment 17 - 18 19 Total Expenses $ 20 I 21 Net Income/Loss $ 22 23 24 26 2 Milestone Three - Variance A halysis 3 4 5 Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate 6 No o 7 8 Labor 9 10 11 Materials 12 13 14 15 Variances for Collar Sales Favorable/ Unfavorable 16 Variance $ 17 Direct Labor Time Variance 18 (Actual Hours - Standard Hours) x Standard Rate 19 20 Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours 21 $ 22 23 Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price $ 24 25 26 Direct Materials Price Variance 27 (Actual Price - Standard Price) x Actual Quantity S 28 29 20