It has now been one month since you launched your business. You are meeting with a few investors soon to share your vision for the company and
ACC 202 Milestone Three Guidelines and Rubric
Scenario
It has now been one month since you launched your business. You are meeting with a few investors soon to share your vision for the company and to ask for more funding. You will be sharing your company’s financial health at this meeting. To do that, you need to determine and analyze your company’s performance over the last month using the data provided.
Directions
Use the information provided in the Milestone Three Actual Costs and Revenue Data Appendix, which is linked in the Supporting Materials section below, to evaluate your company’s performance. Complete the remaining tabs in the Project Workbook that you used for the Milestone One and Milestone Two assignments.
Specifically, you must address the following rubric criteria:
- Statement of Cost of Goods Sold: Prepare the statement of cost of goods sold in the COGS tab of the workbook. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
- Income Statement: Use the given revenue data to prepare the Income Statement tab table and calculate the net income. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table
- Variance Analysis: Prepare the data in the Variances tab to determine whether the variances are favorable or unfavorable. Remember to show your work using calculations to the side of the table or using appropriate formulas in the table.
- Complete the data table for the variances by entering the budgeted (standard) and actual labor and material values. Remember to use the estimates for expected sales from your Milestone Two assignment.
- Determine the variances for direct labor and direct materials in the Variances tab.
- Evaluate the significance of the variances in the Variances tab and mark them as favorable or unfavorable.
What to Submit
Submit the Project Workbook with all tabs completed. This file should be completed and submitted using Microsoft Excel.
Supporting Materials
The following resource supports your work on this assignment:
Reading: Milestone Three Actual Costs and Revenue Data Appendix
Milestone Three Rubric
CriteriaExceeds Expectations (100%)Meets Expectations (85%)Partially Meets Expectations (55%)Does Not Meet Expectations (0%)ValueStatement of Cost of Goods SoldPrepares the statement of cost of goods sold, with no errors; shows work through calculations or formulasPrepares the statement of cost of goods sold, with minimal errorsPrepares the statement of cost of goods sold, with significant errorsDoes not attempt criterion35Income StatementPrepares the income statement and calculates net income, with no errors; shows work through calculations or formulasPrepares the income statement and calculates net income, with minimal errorsPrepares the income statement and calculates net income, with significant errorsDoes not attempt criterion35Variance Analysis: Data TableCompletes the data table for variances, with no errors; shows work through calculations or formulasCompletes the data table for variances, with some errorsCompletes the data table for variances with significant errorsDoes not attempt criterion10Variance Analysis: VariancesDetermines all variances for both direct labor and direct materials; shows work through calculations or formulasDetermines most variances for direct labor and direct materialsDetermines some variances for direct labor and direct materialsDoes not attempt criterion10Variance Analysis: SignificanceCorrectly evaluates all variances as favorable or unfavorableCorrectly evaluates most variances as favorable or unfavorableCorrectly evaluates some variances as favorable or unfavorableDoes not attempt criterion10Total:100%
Cost Classification
| Milestone One: Cost Classification | ||||||
| Instructions: | ||||||
| Putting an X in the appropriate spot, classify the costs as: Direct Material, Direct Labor, Overhead, or Period Costs. | ||||||
| The Fixed and Variable cost classifications have been provided for you. | ||||||
| Item/Cost | Direct Material | Direct Labor | Overhead | Period Costs | Fixed | Variable |
| Salary—Collar maker | x | |||||
| Salary—Leash maker | x | |||||
| Salary—Harness maker | x | |||||
| Salary—Receptionist | ||||||
| High-tensile strength nylon webbing | x | |||||
| Polyester and nylon ribbons | x | |||||
| Buckles made of cast hardware | x | |||||
| Depreciation on sewing machines | x | |||||
| Rent | x | |||||
| Utilities and insurance | x | |||||
| Scissors, thread, and cording | x | |||||
| Price tags | x | |||||
| Office supplies | ||||||
| Other business equipment | ||||||
| Loan payment | x | |||||
| Salary to self | x | |||||
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Variable and Fixed Costs
| Milestone One: Variable and Fixed Costs | ||||||||||||
| Collars | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | $ 4.00 | Collar maker's salary (monthly) | $ 2,773.33 | |||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan payment | $ 183.33 | |||||||||||
| Salary to self | $ 166.67 | |||||||||||
| Total Variable Costs per Collar | Total Fixed Costs | |||||||||||
| Leashes | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | Leash maker's salary (monthly) | |||||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan payment | ||||||||||||
| Salary to self | ||||||||||||
| Total Variable Costs per Leash | Total Fixed Costs | $ – 0 | ||||||||||
| Harnesses | ||||||||||||
| Item | Variable Cost/Item | Item | Fixed Costs | |||||||||
| High-tensile strength nylon webbing | Harness maker's salary | |||||||||||
| Polyester and nylon ribbons | Depreciation on sewing machines | |||||||||||
| Buckles made of cast hardware | Rent | |||||||||||
| Price tags | Utilities and insurance | |||||||||||
| Scissors, thread, and cording | ||||||||||||
| Loan | ||||||||||||
| Salary to self | ||||||||||||
| Total Variable Costs per Harness | Total Fixed Costs | |||||||||||
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Contribution Margin Analysis
| Milestone Two: Contribution Margin Analysis | |||||
| COLLARS | LEASHES | HARNESSES | |||
| Sales Price per Unit | |||||
| Variable Cost per Unit | |||||
| Contribution Margin | |||||
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Break-Even Analysis
| Milestone Two: Break-Even Analysis | ||||||
| COLLARS | LEASHES | HARNESSES | ||||
| Sales Price | $ – 0 | $ – 0 | $ – 0 | |||
| Fixed Costs | $ – 0 | $ – 0 | $ – 0 | |||
| Contribution Margin | $ – 0 | $ – 0 | $ – 0 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 300.00 | $ 400.00 | $ 500.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
| Target Profit | $ 500.00 | $ 600.00 | $ 650.00 | |||
| Break-Even Units (round up) | – 0 | – 0 | – 0 | |||
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COGS
| Milestone Three: Statement of Cost of Goods Sold | ||
| Beginning Work in Process Inventory | $ – 0 | |
| Direct Materials: | ||
| Materials: Beginning | 0 | |
| 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 | 0 | |
| Cost of Goods Sold | ||
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Income Statement
| Milestone Three: Income Statement | ||
| Revenue: | ||
| Collars | $ – 0 | |
| Leashes | – 0 | |
| Harnesses | – 0 | |
| Total Revenue: | $ – 0 | |
| Cost of goods sold | – 0 | |
| Gross profit | $ – 0 | |
| Expenses: | ||
| General and administrative salaries | $ – 0 | |
| Office supplies | – 0 | |
| Other business equipment | – 0 | |
| Total Expenses | $ – 0 | |
| Net Income/Loss | $ – 0 | |
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Variances
| Milestone Three: Variance Analysis | ||||||
| Data for Variance Analysis: | ||||||
| Budgeted (Standard) Hours/Qty | Budgeted (Standard) Rate | Actual Hours/Qty | Actual Rate | |||
| Labor | ||||||
| Materials | ||||||
| Variance | Favorable or Unfavorable | |||||
| Direct Labor Time Variance | ||||||
| (Actual Hours – Standard Hours) x Standard Rate | $ – 0 | |||||
| Direct Labor Rate Variance | ||||||
| (Actual Rate – Standard Rate) x Actual Hours | $ – 0 | |||||
| Direct Materials Quantity/Efficiency Variance | ||||||
| (Actual Quantity – Standard Quantity) x Standard Price | $ – 0 | |||||
| Direct Materials Price Variance | ||||||
| (Actual Price – Standard Price) x Actual Quantity | $ – 0 | |||||
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ACC 202 Milestone Three: Actual Costs and Revenue Data Appendix
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.
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Established Sales Price |
Number of Items Sold per Day |
|
Collars |
|
