Submit a detailed report to your potential investors and other stakeholders to explain and defend your costing strategies and to share your businesss performance to date.

Your business has been open for a month, and you have prepared an income statement and completed a variance analysis on the data. Now you will meet with investors and a few other internal stakeholders to share your companys progress over the past month and how it has performed with respect to your cost and budget projections. The investors would like to see the thought process behind your financial strategy and how your company has performed in its first month. They have therefore asked you to present a report that includes the costing and income data from your Project Workbook.

1. Introduction: Provide a short overview of your company and the purpose of this report.
   1. Business Overview: Name your company and describe its business and your vision for its future.
   2. Purpose of the Report: Explain the purpose of the report and describe why the accounting information is important.
   3. Methods and Approach: Explain the management accounting methods you used for generating the information that you are about to share in terms of your adherence to industry standards and the American Institute of Certified Public Accountants (AICPA) code of ethics.
2. Financial Strategy: Review your original business plan and costing strategies.
   1. Costing System: Justify the use of job order costing for this business. Be sure to compare and contrast the various costing systems you learned about in this course as part of your defense.
   2. Selling Prices: Share and explain the selling prices you established for each of your products. Be sure to reference your cost-volume-profit analysis in your defense.
   3. Contribution Margin: Share and explain your contribution margin per unit. Be sure to reference your cost-volume-profit analysis in your defense.
   4. Target Profits: Identify your break-even points for achieving different target profits. Then explain the target profits you selected for each area of your business. Be sure to reference your cost-volume-profit analysis in your defense.
3. Financial Statements: Using the information in the Milestone Two Market Research Data Appendix, assess your financial performance to date.
   1. Statement of Cost of Goods Sold: Share the statement of cost of goods sold and logically interpret the businesss performance against the provided benchmarks.
   2. Income Statement: Share the income statement and logically interpret the businesss performance against the provided benchmarks.
   3. Variances: Illustrate all variances for the direct labor time and the materials price.
   4. Significance of Variances: Evaluate the significance of the variances in terms of the potential to impact future budgeting decisions and planning.

At the end of the first month of opening your business, you calculate the actual operating costs of the business and the income you earned. You also notice and document the difference in what you budgeted for certain materials and labor against the actual amounts you spent on the same.

For your statement of cost of goods sold, use the following data regarding the actual costs incurred by the business over the past month:

• Materials purchased: $20,000
  • Consumed 80% of the purchased materials
• Direct labor: $8,493
• Overhead costs: $3,765

Note: Assume that the beginning materials and ending work in process are zero for the month.

Use the following revenue and cost information for the income statement. Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Also, assume that after accounting for weekends and other holidays, there were 20 business days in the first month of operation. For example, if you chose a sales price of $20 per collar, the actual number of collars sold in the month was 33 per day or 33 x 20 = 660 per month.

Established Sales Price	Number of Items Sold per Day
Collars
$20	33
$24	28
$28	23
Leashes
$22	28
$26	23
$30	18
Harnesses
$25	25
$30	22
$35	20

The other costs incurred by the business include:

• General and administrative salaries
  • Receptionist: $1,950
• Office supplies: $200
• Other business equipment: $150

Variance

At the end of the month, you find that the labor and materials spent on manufacturing collars was different from what you estimated:

• The collar maker had to work nine hours a day instead of eight due to an increased demand for collars.
• Because of the increased demand, the hourly rate you paid your employee for making the collars increased to $16.50.
• An increase in the cost of raw material led the direct material cost per collar to increase to $10.
• However, you also made and sold 60 more collars than you expected to sell in the month.

You now need to determine the variance in the materials and labor cost from what you estimated in Milestone Two based on the market research data.

Collars \begin{tabular}{lcr} Item & \multicolumn{2}{c}{ Variable Cost/Item } \\ \hline High-tensile strength nylon webbing & $ & 4.00 \\ Polyesterylon ribbons & $ & 3.00 \\ Buckles made of cast hardware & $ & 0.13 \\ Price tags & $ & 83.33 \end{tabular} \begin{tabular}{lrr} Item & \multicolumn{2}{c}{ Fixed Costs } \\ \hline Collar maker's salary (monthly) & $ & 2,773.33 \\ Depreciation on sewing machines & $ & 55.00 \\ Rent & $ & 250.00 \\ Utilities and insurance & $ & 200.00 \\ Scissors, thread, and cording & $ & 400.00 \\ Loan payment & $ & 183.33 \\ Salary to self & $ & 166.67 \end{tabular} Total Variable Costs per Collar Total Fixed Costs $4,028.33 Leashes \begin{tabular}{lcr} Item & \multicolumn{2}{c}{ Variable Cost/Item } \\ \hline High-tensile strength nylon webbing & $ & 6.00 \\ Polyesterylon ribbons & $ & 4.50 \\ Buckles made of cast hardware & $ & 0.17 \\ Price tags & $ & 83.33 \end{tabular} \begin{tabular}{|c|c|c|} \hline Item & \multicolumn{2}{|c|}{ Fixed Costs } \\ \hline Leash maker's salary (monthly) & $ & 2,773.33 \\ \hline Depreciation on sewing machines & $ & 55.00 \\ \hline Rent & $ & 250.00 \\ \hline Utilities and insurance & $ & 200.00 \\ \hline Scissors, thread, and cording & $ & 400.00 \\ \hline Loan payment & $ & 183.33 \\ \hline Salary to self & $ & 166.67 \\ \hline \end{tabular} Total Variable Costs per Leash \begin{tabular}{|c|c|} \hline & 94.00 \\ \hline \end{tabular} Total Fixed Costs $4,028.33 Harnesses \begin{tabular}{lcr} Item & \multicolumn{2}{c}{ Variable Cost/Item } \\ \hline High-tensile strength nylon webbing & $ & 6.00 \\ Polyesterylon ribbons & $ & 4.50 \\ Buckles made of cast hardware & $ & 0.06 \\ Price tags & $ & 83.33 \end{tabular} \begin{tabular}{lrr} Item & \multicolumn{2}{c}{ Fixed Costs } \\ \hline Harness maker's salary & $ & 2,946.67 \\ Depreciation on sewing machines & $ & 55.00 \\ Rent & $ & 250.00 \\ Utilities and insurance & $ & 200.00 \\ Scissors, thread, and cording & $ & 400.00 \\ Loan & $ & 183.33 \\ Salary to self & $ & 166.67 \end{tabular}