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.

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

2 leashes per yard of webbing

2 harnesses per yard of webbing

Polyesterylon ribbons$9 per yard of ribbon

3 collars per yard of ribbon

2 leashes per yard of ribbon

2 harnesses per yard of ribbon

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, 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

Collars Item High-tensile strength nylon webbing Polyesterylon ribbons Buckles made of cast hardware Price tags Total Variable Costs per Collar Variable Cost/Item Item Fixed Costs 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 Leashes Item Variable Cost/Item High-tensile strength nylon webbing Polyesterylon ribbons Buckles made of cast hardware Price tags Total Variable Costs per Leash Harnesses Item Variable Cost/Item High-tensile strength nylon webbing Polyesterylon ribbons Buckles made of cast hardware Price tags Item Fixed Costs 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 Item Fixed Costs Harness maker's salary Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan Salary to self \$ - Total Fixed Costs $ Total Variable Costs per Harness