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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 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

o 3 collars per yard of webbing

o 2 leashes per yard of webbing

o 2 harnesses per yard of webbing

· Polyester/nylon ribbons—$9 per yard of ribbon

o 3 collars per yard of webbing

o 2 leashes per yard of webbing

o 2 harnesses per yard of webbing

· Buckles made of cast hardware—$0.50 per buckle

o 4 buckles used per collar

o 3 buckles used per leash

o 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)

· 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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2 Milestone One - Variable and Fixed Costs
5 Collars
7 Item
ariable Cost/ltem
Item
Fixed Costs
9 High-tensile strength nylon webbi $
10 Polyesterlnylon ribbons
Collar maker's salary (monthly)
$
Depreciation on sewing machines $
4.00
2,773.33
55.00
250.00
200,00
3.00
11 Buckles made of cast hardware
2$
0.13
Rent
12 Price tags
Utilities and insurance
Scissors, thread, and cording
Loan payment
Salary to self
83.33
13
400.00
14
183.33
15
166.67
16
17
19
Total Variable Costs per Co $
90.46
Total Fixed Costs
$ 4,028.33
20
22
23 Leashes
25 Item
ariable Costltem
Item
Fixed Costs
27 High-tensile strength nylon webbi $
28 Polyesternylon ribbons
29 Buckles made of cast hardware
30 Price tags
Leash maker's salary (monthly) $
Depreciation on sewing machines $
2,773.33
55.00
250.00
200.00
6.00
$
4.50
0.16
Rent
83.33
Utilities and insurance
Scissors, thread, and cording
400.00
183.33
167.67
Loan payment
24
Salary to self
$
35
36
38 Total Variable Costs per Le $
94.00
Total Fixed Costs
24
4,028.33
41
42 Harnesses
44 Item
ariable Costltem
Item
Fixed Costs
46 High-tensile strength nylon webbi $
47 Polyesternylon ribbons
6.00
Harness maker's salary
Depreciation on sewing machines $
2,946.60
55.00
250.00
200.00
400.00
183.33
166.67
4.50
48 Buckles made of cast hardware
0.06
Rent
49 Price tags
Utilities and insurance
Scissors, thread, and cording
83.33
50
51
Loan
2$
52
Salary to self
53
54
55
57
Total Variable Costs per Ha $
94.43
Total Fixed Costs
4,201.60
58
60
61
62
63
CA
Cost Classification
Variable and Fixed Costs
Contribution Margin Analysis
Break-Even Analysis
COGS
Income Statement
Variances
Ready
64%
8:16 PM
O Type here to search
70°F Clear
9/11/2021
Transcribed Image Text:AutoSave On ACC 202 Project Workbook wk2 - Saved - O Search Donte Johnson DJ File Home Insert Draw Page Layout Formulas Data Review View Help A Share P Comments D61 fx A B D E F G |L M N O P Q RI S X Y AA AB AC AD AE 2 Milestone One - Variable and Fixed Costs 5 Collars 7 Item ariable Cost/ltem Item Fixed Costs 9 High-tensile strength nylon webbi $ 10 Polyesterlnylon ribbons Collar maker's salary (monthly) $ Depreciation on sewing machines $ 4.00 2,773.33 55.00 250.00 200,00 3.00 11 Buckles made of cast hardware 2$ 0.13 Rent 12 Price tags Utilities and insurance Scissors, thread, and cording Loan payment Salary to self 83.33 13 400.00 14 183.33 15 166.67 16 17 19 Total Variable Costs per Co $ 90.46 Total Fixed Costs $ 4,028.33 20 22 23 Leashes 25 Item ariable Costltem Item Fixed Costs 27 High-tensile strength nylon webbi $ 28 Polyesternylon ribbons 29 Buckles made of cast hardware 30 Price tags Leash maker's salary (monthly) $ Depreciation on sewing machines $ 2,773.33 55.00 250.00 200.00 6.00 $ 4.50 0.16 Rent 83.33 Utilities and insurance Scissors, thread, and cording 400.00 183.33 167.67 Loan payment 24 Salary to self $ 35 36 38 Total Variable Costs per Le $ 94.00 Total Fixed Costs 24 4,028.33 41 42 Harnesses 44 Item ariable Costltem Item Fixed Costs 46 High-tensile strength nylon webbi $ 47 Polyesternylon ribbons 6.00 Harness maker's salary Depreciation on sewing machines $ 2,946.60 55.00 250.00 200.00 400.00 183.33 166.67 4.50 48 Buckles made of cast hardware 0.06 Rent 49 Price tags Utilities and insurance Scissors, thread, and cording 83.33 50 51 Loan 2$ 52 Salary to self 53 54 55 57 Total Variable Costs per Ha $ 94.43 Total Fixed Costs 4,201.60 58 60 61 62 63 CA Cost Classification Variable and Fixed Costs Contribution Margin Analysis Break-Even Analysis COGS Income Statement Variances Ready 64% 8:16 PM O Type here to search 70°F Clear 9/11/2021
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