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Successful entrepreneurs understand all aspects of business, especially costs and costing systems. In the course project, you will assume the role of the owner of
Successful entrepreneurs understand all aspects of business, especially costs and costing systems. In the course project, you will assume the role of the owner of a small business and apply managerial accounting principles to evaluate and manage costs related to your services within a costing system. In the first milestone of the project, you will determine and classify the costs necessary for opening your business.
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.
Prompt
Use the given operational costs in the Milestone One Operational Costs Data Appendix Word Document to complete the first two tabsCost 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.
What to Submit
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. One collar maker, who will be paid $ per hour and work hours per week
One leash maker, who will be paid $ per hour and work hours per week
One harness maker, who will be paid $ per hour and work hours per week
One receptionist, who will be paid $ per hour and work hours per week
Other Costs
Rent: $ per month; allocate based on square footage
Hightensile strength nylon webbing$ per yard of webbing
o collars per yard of webbing
o leashes per yard of webbing
o harnesses per yard of webbing
Polyesternylon ribbons$ per yard of ribbon
o collars per yard of ribbon
o leashes per yard of ribbon
o harnesses per yard of ribbon
Buckles made of cast hardware$ per buckle
o buckles used per collar
o buckles used per leash
o buckles used per harness
industrial sewing machines at $ each for a total of $; depreciation is $ per month year life, zero salvage value
Utilities and insurance: $ per month; allocate based on square footage
Scissors, thread, cording: $
Price tags: $ for $ each
Office supplies: $ or $ per month
Other business equipment: $
Loan payment of $ per month
Salary drawn of $ per month Milestone Three Statement of Cost of Goods Sold
Beginning Work in Process Inventory
Direct Materials:
Materials: Beginning
Add: Purchases for month of January
Materials available for use
Deduct: Ending materials
Materials Used
Direct Labor
Overhead
Total Costs
Deduct: Ending Work in Process Inventory
Cost of Goods SoldSalary and Hiring Data
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