Question

Overview: In the first milestone of your final project, you will determine and classify the costs necessary for opening your business. This is a critical step that must be done correctly for you to successfully complete the subsequent milestones and the final submission. Scenario: Prior to Opening, Part I: You plan to open a pet-services business that will offer dog grooming, day care, and boarding. You can be creative in deciding the name of your business (e.g., "Inspiring Dog Care"), its geographical location (e.g., Chicago), and its mission and vision for adding value to the community. You will be asked to make choices for a few other details to customize your case; otherwise, you should use the information below There are 12 kennels (single dog only) and the day care area can house 10 large dogs and 12 small dogs each day. The grooming facility is 200 square feet, the boarding facility is 2,500 square feet, and the day care is 1,500 square feet. Your groomer can groom five dogs a day for five days a week; each groom consists of 1.5 labor hours. You also offer dog day care six days a week, and kenneling every day. You have taken out a loan for start-up costs and the monthly payment is $420; it goes into effect immediately and should be accounted for in your costs. With limited cash contribution and loan funding, you located two angel investors. You will collect a modest draw for the first year of $600 a month; remember to divide evenly among the services. Note: For simplicity, base all calculations using 30 days in each month. You estimate the following staffing needs A groomer who will be paid $12/hour and work 40 hours a week A day care attendant who will be paid $9/hour and will work 22 eight-hour days per month A receptionist who will be paid $8.50/hour and work 30 hours a week A kennel attendant who will be paid $11.50/hour and will work 22 eight-hour days per month . . A complete list of additional costs is provided below: Food and water bowls: $3.59/unit Daycare: Two bowls last for every 75 dogs that attend daycare Boarding: Two bowls last for every 100 dogs that are boarded; you need two bowls per kennel Grooming: Each bowl lasts for 20 grooms and you need four bowls at all times. o o o Fencing for daycare area: $1,249; installation of fencing: $1,000 Dog grooming arm: $300 12 kennels: $9,500; depreciation is $80/month Rent: $650/month; allocate based on square footage Utilities/insurance: $600/month; allocate based on square footage Grooming table: $900 . . . . Grooming tub: $2800 Heating system: $10,000; depreciation is $83/month; allocate based on square footage .Clippers: $136.99; can be used for 100 grooms Shampoo: $103.96 per five-gallon pail, which can be used for 100 grooms . Cage bank: $2200 per set of 5 Salon Tuff Capri mobile carry cart: S90 Towels: $34.99 per 12 pack o Day care: You need to have 12 towels for every 25 dogs. o Boarding: You need to have 12 towels for every 40 dogs. o Grooming: You need to have two towels for every groom per day. Scissors: (1) 7-inch straight is $194.99, and (1) ear-and-nose is $7.49; each can be used for 200 grooms. Toys: $3.29 per 6-pack; one toy will last for two dogs in day care, per day. . Cleaning products: o Odoban: $14.55/gallon: Each area will dilute 1 oz to 1 gallon of water; allocate based on square footage. o Simple Green: $15.66/gallon: each area will dilute 1 oz to 1 gallon of water; allocate based on square footage. Dryer: $1250 Rubberized flooring for day care: $3800 Prompt: Complete the first three tabs, addressing the following critical elements: Determine the unique characteristics of your company in the "Company Profile" tab of your workbook. Accurately classify all of your costs in the "Cost Classification" tab of your workbook. Determine your per-unit cost per dog in the "Variable_Fixed" tab of your workbook. (Most costs are filled in for you. Only compute the missing costs.) 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 COMPANY PROFILE TAB Detemine a company name. Be creative (e.g. "Inspiring Dog Care") Pick a location (e.g. "Chicago") Define your company's vision and mission for how your business will add value to the community 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) LARY & 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 THER 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 wil 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 tor 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 XYZ Corporation MILESTONE 1-Cost Classification Exercise INSTRUCTIONS: Putting an X in the appropriate spot, classify the costs highlighted in yellow as: Direct Material, Direct Labor, Overhead, or Period Costs. Other costs have been ided for The fixed and variable cost classifications have been provided for you. For more information see Objective 1 in Chapter 5. Costs (Payments) for the Purpose of Generating R Direct Direct Labor Fixed Period Costs Variable evenues Period Costs Day care attendant Receptionist Kennel attendant Food and water bowls Depreciation on kennels Rent Utilties and insurance Grooming tub 48" Depreciation on heating system Clippers Shampoo (Crystal Clear: five-gallon pail) Towels Scissors (7-inch straight, ear & nose) Toys (used in day care only) Cleaning products (used throughout) (Balance Sheet) Cost of Selling and min Exp. Income Stat s Sold Income Statement Variable & Fixed Cost Exercise INSTRUCTIONS: Determine the per unit cost for each dog Fill in the blanks to get the per unit cost and fixed cost of each service. Based on 5 grooms per day GROOMING Item Shampoo Clipper(s) Bowls Towels Scissors Variable Costs Fixed Costs Item Groomer Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw 1.37 0.72 5.83 1.01 30.95 20.00 28.57 3.95 2.08 2.36 200.00 2,367.91 Total Variable Costs Total Fixed Costs 9.97 Based on 22 dogs per day for six days a week. Assume 25 operating days for kennel and 22 eight-hour work days for kennel attendant. DAY CARE Item Day care attendant Toys Bowls Towels Variable Costs Fixed Costs Item Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw 2.88 0.27 0.10 1.40 232.14 150.00 29.64 15.59 16.78 200.00 858.44 Total Variable Costs Total Fixed Costs Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant. BOARDING Item Kennel attendant Bowls Towels Variable Costs Fixed Costs Item Depreciation on kennels Rent Loan 80.00 386.90 250.00 0.86 0.87 Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw 49.40 25.98 29.55 200.00 1,378.97 Total Variable Costs Total Fixed Costs 7.35

Answer 1

Direct Material Direct Labor Manufacturing Overhead Item/Cost Period Costs Fixed Variable Groomer Day care attendant Receptionist Kennel attendant Food and water bowls encing for day care area Installation of fencing Dog grooming arm (attaches to table) 12 kennels cost Depreciation on kennels Rent Utilties and insurance Grooming table Grooming tub 48" Heating system Depreciation on heating system Shampoo (Crystal Clear: five-gallon pail) Cage bank (set of five) Salon Tuff Capri mobile carry cart Towels Scissors (7-inch straight, ear & nose) Toys (used in day care only) Cleaning products (used throughout) Rubberized flooring (day care) Loan Draw

Based on 5 grooms per day GROOMING Variable Costs Fixed Costs tem Item Groomer Rent Loan Utilities and Insurance Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Shampoo (103.96/100) Clipper(s) Bowls Towels Scissors 2,080.01 30.95 20.00 28.57 95 2.08 2.36 1.04 1.37 0.72 5.83 1.01 Total Variable Costs Total Fixed Costs 2,367.92 9.97 Based on 22 dogs per day for six days a week. Assume 25 operating days for kennel and 22 eight-hour work days for kennel attendant. DAY CARE Item Variable Costs Fixed Costs Item Rent Loan Utilities and Insurance 600 (1500/4200) Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Day care attendant Toys Bowls Towels 2.88 0.27 0.10 1.40 232.14 150.00 214.29 15.59 16.78 200.00 858.44 Total Variable Costs Total Fixed Costs 4.65 Based on 12 dogs per day. Assume 22 eight-hour work days for kennel attendant. BOARDING Variable Costs Fixed Costs tem Item Depreciation on kennels Rent Loan Utilities and Insurance ROUND(600* (2500/4200),2) Depreciation on heating system Cleaning Products: Odoban Cleaning Products: Simple Green Draw Kennel attendant ROUND (11.5 *8)*22/(12*30),2)$ Bowls Towels 5.62 0.86 0.87 80.00 386.90 250.00 357.14 49.40 25.98 29.55 Total Variable Costs Total Fixed Costs 7.35 1,378.97