Question

Overview: In the third milestone, you will jump forward in time: Imagine that your business has already opened. Use the updated scenario information to analyze your company's performance. Post-opening Scenario: Your angel investors are silent in relation to the business; however, they require board meetings for status updates on the company's financial health. Therefore, you need to analyze your company's performance over the last month using the data provided below. Note: Your instructor will create an announcement sharing the income statement data by the end of Module Four. For your variance analysis, use the following financial data: Standard Hours Grooming Labor Standard Rate Actual Hours Actual Rate $12 $11.50 180 150 Actual Quantity Standard Quantity Grooming Materials Standard Price Actual Price $2 $3 1000 1200 Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Income for January-actual activity based on price levels: For example, if you chose a grooming price of $25 per groom, the actual grooms in January were 4 per day assuming a 30-day month. pricing level options The actual #of grooms/daycare/kennel Grooming price $25 4 grooms per day Grooming price $30 3 grooms per day Grooming price $35 2 grooms per day Daycare price $18 22 dogs per day 12 dogs per day Daycare price $20 Daycare price $25 9 dogs per day Kennel price $25 12 dogs per day Kennel price $28 9 dogs per day Kennel price $30 6 dogs per day Direct Direct Item/Cost Material Period Costs Fixed Variable Labor Overhead Groomer X Day care attendant X X Receptionist X X Kennel attendant X Food and water bowls X X X Depreciation on kennels X Rent Utilties and insurance Grooming tub 48" X X Depreciation on heating system X Clippers X Shampoo (Crystal Clear: five-gallon pai X Towels X Scissors (7-inch straight, ear & nose) X X Toys (used in day care only) X X Cleaning products (used throughout) X Dryer X : X X X: X X X X: Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant. BOARDING Item Yariable Costs Item Fized Costs Depreciation on kennels Kennel attendant 5,62 80.00 Bowls 0.86 Rent 386,90 Towels 0,87 Loan 250.00 Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green 357.14 49.40 25,98 29.55 Draw 200.00 Total Variable Costs 7.35 Total Fized Costs 1,378.97 SCENARIO (choose one from each category): Dog Day Care 1. With pricing at $18 per dog per day, you can expect to have 22 dogs per day. 2. With pricing at $20 per dog per day, you can expect to have 15 dogs per day. 3. With pricing at $25 per dog per day, you can expect to have 10 dogs per day. Overnight Boarding 1. With pricing at $25 per dog per day, you can expect to have 12 dogs per day. 2. With pricing at $28 per dog per day, you can expect to have 10 dogs per day 3. With pricing at $30 per dog per day, you can expect to have 7 dogs per day. Basic Groom 1. With pricing at $25 per dog per day, you can expect to have 5 dogs per day. 2. With pricing at $30 per dog per day, you can expect to have 4 dogs per day. 3. With pricing at $35 per dog per day, you can expect to have 3 dogs per day DAY CARE BOARDING GROOMING Sales Price per Unit S 18.00 25.00 25.00 Variable Cost per Unit 4.65 7.35 9.97 Contribution Margin 13.35 17.65 15.03 INSTRUCTIONS: Show all steps and calculations to determine the break-even Determine the break-even for the target profit levels as outlined in the instructions Break-even = Fixed Costs / Contribution Margin DAY CARE BOARDING GROOMING Sales Price S 18.00 25.00 25.00 Fixed Costs S S 858 1,379 2,368 Contribution Margin 13.35 17.65 15.03 Break-even Units (round up) 158.00 65.00 79.00 Target Profit S 417.00 S 583.00 1,000.00 Break-even Units (round up) 96,00 112.00 225.00 Target Profit 667.00 909.00 1,500.00 Break-even Units (round up) 130,00 115.00 258,00 INSTRUCTIONS: The following are the actual numbers for January Materials Purchased $5,000 of Materials Consumed 40% of those purchased materials Direct Labor Direct Labor was $6,240 Overhead Overhead was $2,800 Statement of Cost of Services For the Month Ended January 31, xxxx Beginning Work in Process Inventory Direct Materials: Materials Beginning Add: Purchases for month of January Materials Available for Use Deduct: Ending Materials Materials Used Direct Labor Overhead Total Service Costs Deduct: Ending Work in Process Inventory 0 Cost of Services Cost of Goods Sold = Cost of Services There is no finished goods inventory to maintain. INSTRUCTIONS: Complete the Statement in proper form Revenue will be provided in an Announcement at the end of Module 4 (based on actual number of services for your pricing levels) Additional Information necessary to complete the Income Statement: General & Administrative Salaries paid $1,200 Advertising $100 cleaning Products $120 Depreciation $83 Rent $650 Loan $420 Utilities & Insurance= $600 Income Statement For the Month Ended January 31, xxxx Revenue: Grooming Day Care Boarding S Tota Revenue Cost of Services Gross Profit S Expenses G&A Salaries Advertising Cleaning Products Depreciation Rent Loan Utilities and Insurance Total Expenses Net Income / Loss S Cost of Goods Sold Cost of Services There is no finished goods inventory to maintain. INSTRUCTIONS: Prepare the variances and identify whether they are favorable or unfavorable. DATA FOR VARIANCE ANALYSIS: Actual Actual Standard Standard Hours Qty Hours Qty Rate Rate S 180 Grooming Labor 150 12.00 11.50 Grooming Materials 1,000 $ 3.00 2.00 1,200 Favorable/ Variance Unfavorable Groomer Direct Labor Time Variance (Actual Hours Standard Hours) x Standard Rate S Groomer Direct Labor Rate Variance (Actual Rate Standard Rate) x Actual Hours Direct Materials Quantity/Efficiency Variance (Actual Quantity Standard Quantity) x Standard Price S Direct Materials Price Variance (Actual Price Standard Price) x Actual Quantity

Answer 1

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