Select an item which you will like to manufacture. You don’t actually need to manufacture something, but would proceed through assignment as if you were planning on manufacturing item you have selected. The product must require materials and labor and be something that you are familiar with in process from start to finish. Product should be useful and marketable. You could select 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.
Do the following steps:
Select a product to manufacture and to explain the manufacturing process.
Create the following budgets for 1 quarter broken down monthly regarding your selected item: estimated sales budget, estimated direct materials budget, estimated direct labors budget, estimated manufacturing overhead budget, estimated selling and administrative expenses and an estimated income statement.
Classify all manufacturing costs and selling and administrative expenses as either variable or fixed.
Create a contribution margin income statement separating all variable and fixed costs into their own categories.
Determine the breakeven point in units and dollars. Also, find out 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 must be aware of in the industry and who the primary competitors are.
Answer the following question: If you had to improve bottom line, what will you do and what concerns will you have going forward.
Select a piece of equipment which you may consider purchasing to increase production of your item and address following questions:
What types of capital budgeting factors will you look at when deciding whether to do this? What will be the appropriate costs which you will consider in this decision?
Your final project must be in the form of a paper using Microsoft Word which addresses each of these different areas. Steps #1, 6, 7 and 8 would be in paragraph form and Steps #2, 3, 4 and 5 would involve numerical calculations which must be put into form of a table in proper format and included as part of the paper. You must show any calculations in either a table within Word or you could copy and paste your calculations directly from Microsoft Excel into Microsoft Word.