University:
Eastern Kentucky University
Course:
ACC 301 | Intermediate Accounting I
Academic year:

2020
Views:

325

Pages:

7
Author:

Dominick Dickson

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 Salary - Leash maker Salary - Harness maker Buckles made of cast hardware x x x x x x x x x x x Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Price tags x x x Other business equipment Salary to self x x x x x Office supplies Loan payment Variable x x x Salary - Receptionist Polyester/nylon ribbons Fixed x x x Salary - Collar maker High-tensile strength nylon webbing Period Costs x x x x Milestone One - Variable and Fixed Costs Collars Item Variable Cost/Item High-tensile strength nylon webbing $ Polyester/nylon ribbons $ Buckles made of cast hardware $ Price tags $ Total Variable Costs per Collar $ 4.00 3.00 2.00 0.10 Item Fixed Costs Collar maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self 9.10 Total Fixed Costs $ $ $ $ $ $ $ $ 2,773.33 55.00 250.00 200.00 400.00 183.33 166.67 4,028.33 Leashes Item Variable Cost/Item High-tensile strength nylon webbing $ Polyester/nylon ribbons $ Buckles made of cast hardware $ Price tags $ Total Variable Costs per Leash $ 6.00 4.50 1.50 0.10 Item Fixed Costs Leash maker's salary (monthly) Depreciation on sewing machines Rent Utilities and insurance Scissors, thread, and cording Loan payment Salary to self 12.10 Total Fixed Costs $ $ $ $ $ $ $ 2,773.33 55.00 250.00 200.00 400.00 183.33 166.67 $ 4,028.33 Harnesses Item Variable Cost/Item High-tensile strength nylon webbing $ Polyester/nylon ribbons $ Buckles made of cast hardware $ Price tags $ 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 Salary to self Fixed Costs $ $ $ $ $ $ $ 2,946.67 55.00 250.00 200.00 400.00 183.33 166.67 Total Variable Costs per Harness $ 14.60 Total Fixed Costs $ 4,201.67 Milestone Two - Contribution Margin Analysis COLLARS LEASHES HARNESSES Sales Price per Unit Variable Cost per Unit $ 25.00 9.10 $ 35.00 12.10 $ 40.00 14.60 Contribution Margin $ 15.90 $ 22.90 $ 25.40 Milestone Two - Break-Even Analysis COLLARS LEASHES HARNESSES Sales Price $ 25.00 $ 35.00 $ 40.00 Fixed Costs $ 4,028 $ 4,028 $ 4,202 Contribution Margin $ 15.90 $ 22.90 $ 25.40 Break-Even Units (round up) Target Profit 254.00 $ Break-Even Units (round up) Target Profit Break-Even Units (round up) 300.00 176.00 $ 273.00 $ 500.00 285.00 400.00 166.00 $ 194.00 $ 600.00 203.00 500.00 186.00 $ 650.00 192.00