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
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 company’s 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 tabs, “Cost Classification” and “Variable and Fixed Costs,” in the Project Workbook Spreadsheet.
Instructions
| Southern New Hampshire University | |||||||||||
| College of Continuing Education (COCE) | |||||||||||
| ACC202 – Managerial Accounting | |||||||||||
| MILESTONE 1 (Due in Module 2) | MILESTONE 2 (Due in Module 4) | MILESTONE 3 (Due in Module 5) | |||||||||
| 1. | 1. | 1. | |||||||||
| Name | Choose a price range and calculate: | Create a Cost of Goods Manufactured Schedule | |||||||||
| Location | Grooming | ||||||||||
| Vision | Day Care | ||||||||||
| Mission | Boarding | ||||||||||
| 2. | 2. | 2. | |||||||||
| Identify the following: | Calculate the break-even units | Create an Income Statement | |||||||||
| Direct Materials | Grooming | Revenue will be provided end of week 4 | |||||||||
| Diret Labor | Day Care | ||||||||||
| Manufacturing Overhead | Boarding | ||||||||||
| Period Costs | Calculate the break-even for target profits | ||||||||||
| 3. | Grooming | 3. | |||||||||
| Day Care | |||||||||||
| Calculate the Variable & Fixed Costs for: | Boarding | Calculate for the Grooming line: | |||||||||
| Grooming | Direct Labor Time Variance | ||||||||||
| Day Care | Direct Labor Rate Variance | ||||||||||
| Boarding | Direct Materials Efficiency Variance | ||||||||||
| Direct Materials Price Variance |
ACC202 – MANAGERIAL ACCOUNTING
Company Profile
/xl/drawings/drawing1.xml#CompanyProfile
Variable & Fixed Costs
/xl/drawings/drawing1.xml#VariableFixedCosts
Cost Classification
/xl/drawings/drawing1.xml#CostClassification
Contribution Margin
/xl/drawings/drawing1.xml#ContributionMargin
Break-Even Analysis
/xl/drawings/drawing1.xml#BreakevenAnalysis
COGM Schedule
/xl/drawings/drawing1.xml#COGMSchedule
Income Statement
/xl/drawings/drawing1.xml#COGMSchedule
Variances
/xl/drawings/drawing1.xml#Variances
Instructions Milestone 1
/xl/drawings/drawing1.xml#InstructionsMilestone1
Instructions Milestone 2
/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%202'!InstructionsMilestone2
Instructions Milestone 3
/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%203'!InstructionsMilestone3
Instructions – Milestone 1
| Southern New Hampshire University | ||||
| College of Continuing Education (COCE) | ||||
| ACC202 – Managerial Accounting | ||||
| INSTRUCTIONS FOR MILESTONE 1 (Due Week 2) | ||||
| IMPORTANT NOTE: | ||||
| Make sure to completely review the Rubric for Milestone 1 | ||||
| Use the data from this Milestone and begin working on your final presentation due in Milestone 4 (Week 7) | ||||
| ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs): | ||||
| GENERAL | ||||
| You plan to open a pet services business that will offer dog grooming, day care and boarding | ||||
| COST CLASSIFICATION | ||||
| Accurately classify all of your costs (direct material, direct labor, manufacturing overhead, period costs) | ||||
| Fixed & Variable cost designation is provided | ||||
| VARIABLE & FIXED COSTS | ||||
| Determine your per unit cost per dog for grooming, day care and boarding | ||||
| OPERATIONAL & COST INFORMATION: | ||||
| For simplicity, base all calculations using 30 days in each month | ||||
| OPERATIONAL DATA | ||||
| Grooming: | ||||
| The Groomer can groom 5 dogs a day, 5 days a week | ||||
| Each grooming takes 1.5 labor hours | ||||
| Day Care: | ||||
| The Day Care can house 10 large dogs and 12 small dogs daily. | ||||
| Day Care is offered 6 days a week | ||||
| Boarding: | ||||
| There are 12 kennels (single dog only). | ||||
| Boarding (kennel services) is offered every day | ||||
| Facilities: | ||||
| The Grooming facility is 200 square feet | ||||
| The Boarding facility is 2,500 square feet | ||||
| The Day Care facility is 1,500 square feet | ||||
| General: | ||||
| Loan for start-up costs – monthly payment of $420; in effect immediately; limited cash and loan funding – used angel investors | ||||
| Modest monthly draw of $600 a month for first year; should be divided evenly amoung the services (grooming, day care, boarding) | ||||
| SALARY & HIRING DATA | ||||
| Groomer (Allison) – $12.00 an hour, 40 hours a week | ||||
| Day Care Attendant (Beverly) – $9.00 per hour, based on need | ||||
| Receptionist (Cathie) – $8.50 per hour, 30 hours a week | ||||
| Kennel Attendant (Ben) – $11.50 per hour, based on need | ||||
| OTHER COST DATA | ||||
| Grooming: | ||||
| Dog Grooming Arm – $300 | . | |||
| Grooming Table – $900 | ||||
| Grooming Tub – $2,800 | ||||
| Clippers – $136.99; can be used for 100 grooms | ||||
| Shampoo – $103.96 per 5-gallon pail; can be used for 100 grooms | ||||
| Salon Tuff Capri Mobile Carry Cart – $90 | ||||
| Scissors (7 inch straight) – $194.99; used for 200 grooms | ||||
| Scissors (ear and nose) – $7.49; used for 200 grooms | ||||
| Day Care: | ||||
| Fencing for Day Care area – $1,249 | ||||
| Fencing Installation – $1,000 | ||||
| Toys – $3.29 per 6 pack; one toy will last for two dogs in day care per day | ||||
| Rubberized Flooring for Day Care – $3,800 | ||||
| Boarding: | ||||
| 12 Kennels; Depreciation is $80 per month | ||||
| General: | ||||
| Food & Water bowls – $3.59 per unit | ||||
| Day Care – two bowls last for every 75 dogs that attend daycare | ||||
| Boarding – two bowls last for every 100 dogs boarded; two bowls per kennel | ||||
| Grooming – each bowl lasts for 20 grooms and you need 4 bowls at all times | ||||
| Towels – $34.99 per 12 pack | ||||
| Day Care – 12 towels for every 25 dogs | ||||
| Boarding – 12 towels for every 40 dogs | ||||
| Grooming – 2 towels for every groom per day | ||||
| Heating System – $10,000; Depreciation is $83 per month; Allocate based on square footage | ||||
| Rent – $650 per month; Allocate based on square footage | ||||
| Utilities / Insurance – $600 per month; Allocate based on square footage | ||||
| Cage Bank – $2,200 per set of 5 | ||||
| Dryer – $1,250 | ||||
| Cleaning Products | ||||
| Odoban – $14.55 per gallon; Each area wil dilute 1 oz to 1 gallon of water; Allocate based on square footage | ||||
| Simple Green – $15.66 per gallon; Each area will dilute 1 oz to 1 gallon of water; Allocate based on square footage | ||||
| . |
ACC202 – MANAGERIAL ACCOUNTING
HOME
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/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 | |||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
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/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/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/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 | |||||||||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Instructions – Milestone 2
| Southern New Hampshire University |
| College of Continuing Education (COCE) |
| ACC202 – Managerial Accounting |
| INSTRUCTIONS FOR MILESTONE 2 (Due Week 4) |
| IMPORTANT NOTE: |
| Make sure to completely review the Rubric for Milestone 2 |
| Use the data from this Milestone and begin working on your final presentation due in Milestone 4 (Week 7) |
| ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs): |
| GENERAL |
| Use data from Milestone 1 in your analysis |
| CONTRIBUTION MARGIN ANALYSIS |
| Select a price for each service (grooming, day care, boarding) |
| Determine the variable cost from the Variable_Fixed tab for each service |
| Calculate the contribution margin for each service based on your sales price and the variable cost for that service |
| BREAK-EVEN ANALYSIS |
| Determine the fixed cost from the Variable_Fixed tab for each service |
| Fixed & Variable cost designation is provided |
| Calculate the break-even units (round up) for each service |
| Calculate the break-even units (round up) for suggested target profit levels for each service |
ACC202 – MANAGERIAL ACCOUNTING
HOME
Contribution Margin Analysis
| Milestone Two – Contribution Margin Analysis | |||||
| COLLARS | LEASHES | HARNESSES | |||
| Sales Price per Unit | |||||
| Variable Cost per Unit | |||||
| Contribution Margin | |||||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
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 | |||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
Instructions – Milestone 3
| Southern New Hampshire University |
| College of Continuing Education (COCE) |
| ACC202 – Managerial Accounting |
| INSTRUCTIONS FOR MILESTONE 3 (Due Week 5) |
| IMPORTANT NOTE: |
| Make sure to completely review the Rubric for Milestone 3 |
| Use the data from this Milestone and begin working on your final presentation due in Milestone 4 (Week 7) |
| ITEMS TO COMPLETE FOR THIS MILESTONE (Purple Tabs): |
| GENERAL |
| Use data from Milestone 1 and Milestone 2 in your analysis |
| Revenue data needed for the Income Statement will be provided at the end of Module 4 |
| COST OF SERVICES PROVIDED SCHEDULE |
| Use the data at the top of the schedule to complete the report |
| INCOME STATEMENT |
| Use the data at the top of the schedule to complete the report |
| Use the data from your Cost of Services Provided Schedule |
| VARIANCES |
| Use the data at the top of the schedule to calculate the following: |
| Variance |
| Favorable / Unfavorable |
ACC202 – MANAGERIAL ACCOUNTING
HOME
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 | ||
&8ACC202 – MANAGERIAL ACCOUNTING
HOME
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 | |
&8ACC202 – MANAGERIAL ACCOUNTING
Variances
| Milestone Three – Variance Analysis | ||||||
| Data for Variance Analysis: | ||||||
| Budgeted (Standard) Hours/Qty | Budgeted (Standard) Rate | Actual Hours/Qty | Actual Rate | |||
| Labor | ||||||
| Materials | ||||||
| Variances for Collar Sales | ||||||
| Variance | Favorable/ 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 | |||||
&8ACC202 – MANAGERIAL ACCOUNTING
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ACC 202 Milestone One: Operational Costs Data Appendix
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
Polyester/nylon 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
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