Choose an item that you would like to manufacture. You do not actually need to m
ID: 2425684 • Letter: C
Question
Choose an item that you would like to manufacture. You do not actually need to manufacture something, but will proceed through the assignment as if you were planning on manufacturing the item you have selected. The product should require materials and labor and be something that you are familiar with in process from start to finish. The product must be useful and marketable. You can choose something as simple as making chocolate chip cookies, a type of craft, or something more complicated. Consider production as if you were making the product from beginning to end, and not as if using a kit.
Perform the following steps:
Choose a product to manufacture and describe the manufacturing process.
Forecast the variable cost per unit.
Forecast manufacturing costs and selling and administrative expenses as either variable or fixed.
Prepare a contribution margin income statement separating all variable and fixed costs into their own categories.
Determine the breakeven point in units and dollars. Also, determine the number of units and dollars that need to be sold to make a target profit of $5,000 a month.
Identify what types of trends you should be aware of in the industry and who the primary competitors are.
Develop a balanced scorecard for a company that will sell your product, indicating two financial, two internal business process, two customer, and two learning and growth key productive indicators that will serve as the basis for your product strategy. Based on your costing scenario and information gathered from items 1-6, develop viable targets for these key productive indicators. Name an initiative the company can take to ensure the target is met.
Your final project should be in the form of a PowerPoint presentation that addresses each of these different areas. Steps #1-5 will involve numerical calculations and 6-7 should be put into the form of a table in proper format and included as part of the presentation. You should show any summary calculations in a table within a slide. Your submission should be 7-8 slides and follow the Writing and APA Requirements
Explanation / Answer
SLIDE 1
Chocolate Chip Cookies
Preparation of Chocolate Chip Cookies requires various Ingredients which include Butter, Sugar, Eggs, Essence extract, All Purpose Flour, Baking Soda, Water, Salt, Chocolate Chips, Chopped Walnuts.
Essence extract determines the flavour of the cookie. Our Cookie has a Vanilla flavour derived from the Vanilla essence.
Directions to Cook.
Pre heat the Oven and mix all the ingrediets together. Make the dough into the size of your convenience and bake for the same for 30 Min. Open the Oven after 30 Min and the Cooies are ready.
SLIDE 2
Manufacturing of Chocolate Chip Cookies.
Raw Material = $3 ( This includes all the Ingredients)
Labor = $3
Over Heads = $2 ( Power, Oven maintenance etc.,)
Fixed Costs = $5000 (Cost of Oven)
Selling and Distribution Overheads = 3 ( This include Advertising, Packing and transport charges)
Selling Price = $14
SLIDE 3
Contribution Margin statement
Selling Price
14
Raw Material
-3
Labour
-3
Over Heads
-2
Selling and Distribution Over heads
-3
Contribution Margin
3
SLIDE 4
Break Even Point
In Units = 1,667 Units
In Dollars = 23,338
SLIDE 5
Target Profit of $5000
In Units = 3,334 Units
In Dollars = 46,676 Dollars
SLIDE 6
Balanced Score Card
Financial perspective
Contribution of $3 per Cookie is a motivating factor.
Fixed cost is only $5000. It is easy to recover and once the cost is recovered, the firm will turn to huge profits.
Internal business perspective
This is a capital intensive firm and less controls are required for efficiency.
The main bottleneck is the Fixed Asset i.e., Oven
Customer perspective
Cookie is an item that is preferred by all age groups.
The customer wants to consume all the through the year
Two learning and growth perspective
The experience is the deciding factor in the learning
The firm is not labor intensive, so the employee turnover has less impact.
SLIDE 7
The Cookie market has a customer base of all age groups and throughout the year.
Selling Price
14
Raw Material
-3
Labour
-3
Over Heads
-2
Selling and Distribution Over heads
-3
Contribution Margin
3