Styles 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 . . o o . 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 2 leashes per yard of webbing 2 harnesses per yard of webbing Polyesterylon ribbons-$9 per yard of ribbon 3 collars per yard of webbing 2 leashes per yard of webbing 2 harnesses per yard of webbing Buckles made of cast hardware--$0.50 per buckle 4 buckles used per collar 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) 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 . . . . G S INSTRUCTIONS: 6. Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. 7 The Faxed and Variable cost classifications have been provided for you. 8 Direct Direct Item/Cost Material Labor Overhead Period Costs 19 Fixed Variable X X X 12 Salary - Collar maker 13 Salary - Leash maker 14 Salary - Harness maker 15 Salary - Receptionist 16 High-tensile strength nylon webbing 17 Polyesterylon ribbons 1B Buckles made of cast hardware 19 Depreciation on sewing machines 20 Rent X X X X X 21 Utilities and insurance 22 Scissors, thread, and cording 23 Price tags 24 Office supplies 25 Oter business equipment 26 Loan payment 27 Salary to self 28 09 X 2 Milestone One - Variable and Fixed Costs 5 Collars Item Fixed Costs $ 2,773.33 7 Item Variable Cost/Item 9 High-tensile strength nylon webbing $ 4.00 10 Polyesterylon ribbons 11 Buckles made of cast hardware 12 Price tags 13 14 15 16 17 19 Total Variable Costs per Collar 20 Collar maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self $ $ 183.33 166.67 Total Fixed Costs 22 23 Leashes 25 Item Variable Cost/Item Fixed Costs 27 High-tensile strength nylon webbing 28 Polyesterylon ribbons 29 Buckles made of cast hardware 30 Price tags 31 32 33 34 35 36 38 Total Variable Costs per Leash Item Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self Total Fixed Costs 29 S Co LE B D F G H 22 23 Leashes 25 item Variable Cost/Item Item Fixed Costs 27 High-tensile strength nylon webbing 28 Polyesterylon ribbons 29 Buckles made of cast hardware 30 Price tags 31 Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self 32 33 34 35 36 Total Variable Costs per Leash 88 59 Total Fixed Costs 1 2 Harnesses Variable Cost/Item Item Fixed Costs 4 Item 6 High-tensile strength nylon webbing 7 Polyesterylon ribbons 3 Buckles made of cast hardware Price tags Harness maker's salary Depretation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan Salary to self Total Variable Costs per Harness Total Fixed Costs