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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

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 weekimage text in transcribed

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

Milestone Two - Contribution Margin Analysis

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