Direct Material, Direct Labor, Overhead, or Period Costs

Milestone One - Cost Classification INSTRUCTION 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 x Salary - Leash maker x x Salary - Harness maker x x x Salary - Receptionist High-tensile strength nylon webbing x x Polyester/nylon ribbons x x Buckles made of cast hardware x x Depreciation on sewing machines x x Rent x x Utilities and insurance x x Scissors, thread, and cording x x Price tags x x x x Office supplies x Other business equipment Loan payment x x x Salary to self x x x Milestone One - Variable and Fixed Costs Collars Item High-tensile strength nylon webbing Polyester/nylon ribbons Buckles made of cast hardware Price tags Total Variable Costs per Collar Variable Cost/Item $ $ $ $ 4.00 3.00 2.00 0.10 $ 9.10 Item 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 Fixed Costs $ $ $ $ $ $ $ 2,773.33 55.00 250.00 200.00 400.00 183.33 166.67 $ 4,028.33 Leashes Item High-tensile strength nylon webbing Polyester/nylon ribbons Buckles made of cast hardware Price tags Total Variable Costs per Leash Variable Cost/Item $ $ $ $ 6.00 4.50 1.50 0.10 $ 12.10 Item 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 Fixed Costs $ $ $ $ $ $ $ 2,773.00 55.00 250.00 200.00 400.00 183.33 166.67 $ 4,028.00 Harnesses Item High-tensile strength nylon webbing Polyester/nylon ribbons Buckles made of cast hardware Price tags Variable Cost/Item $ $ $ $ 6.00 4.50 4.00 0.10 Item Harness maker's salary Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan Fixed Costs $ $ $ $ $ $ 2,946.00 55.00 250.00 200.00 400.00 183.33 Salary to self Total Variable Costs per Harness $ 14.60 Total Fixed Costs $ 166.67 $ 4,201.00 Contribution Margin Analysis COLLAR LEASHE HARNESSE Sales Price per Unit Variable Cost per Unit $ 20.00 9.10 $ 26.00 12.10 $ 30.00 14.60 Contribution Margin $ 10.90 $ 13.90 $ 15.40 Break-Even Analysis COLLAR LEASHE HARNESSE Sales Price $ 20.00 $ 26.00 $ 30.00 Fixed Costs $ 4,138 $ 4,138 $ 4,312 Contribution Margin $ 10.90 $ 13.90 $ 15.40 Break-Even Units (round up) Target Profit 379.63 $ Break-Even Units (round up) Target Profit Break-Even Units (round up) 300.00 297.70 $ 299.00 $ 500.00 312.00 400.00 280.00 $ 460.00 $ 600.00 480.00 500.00 237.00 $ 650.00 244.00 Statement of Cost of Goods Sold Beginning Work in Process Inventory Direct Materials: Materials: Beginning Add: Purchases for month of January Materials available for use Deduct: Ending materials $ $ 0 20,000 20,000 (4,000) 16,000 8,493 3,765 Materials Used Direct Labor Overhead Total Costs $ 28,258 0 Deduct: Ending Work in Process Inventory Cost of Goods Sold - $ 28,258 Income Statement Revenue: Collars Leashes Harnesses $ 13,200 11,960 13,200 Total Revenue: Cost of goods sold Gross profit $ 38,360 28,258 10,102 Total Expenses $ 2,300.00 Net Income/Loss $ 7,802.00 Expenses: General and administrative salaries Office supplies Other business equipment $ $ 1,950 200 150 Variance Analysis Data for Variance Analysis: Budgeted (Standard) Hours/Qty Budgeted (Standard) Rate Actual Hours/Qty Actual Rate Labor 160 $ 16.00 180 $ 16.50 Materials 500 $ 9.10 560 $ 10.00 Variances for Collar Sales Variance Favorable/ Unfavorable Direct Labor Time Variance (Actual Hours - Standard Hours) x Standard Rate $ 320.00 Unfavorable Direct Labor Rate Variance (Actual Rate - Standard Rate) x Actual Hours $ 90.00 Unfavorable Direct Materials Quantity/Efficiency Variance (Actual Quantity - Standard Quantity) x Standard Price $ 546.00 Direct Materials Price Variance (Actual Price - Standard Price) x Actual Quantity $ 504.00 Unfavorable Unfavorable