Develop the full cost of a simple item.
- Choose a simple, everyday household item (i.e. loaf of bread, fabric placemat, broom) to investigate its full cost.
- Describe the product and why it was chosen.
- Identify all direct and indirect materials used in production.
- Identify the different production stages and the labor requirements for each stage.
- Calculate the overhead.
- You will use the material, labor, and overhead amounts to calculate the production cost per unit.
- Find the selling price for your product.
- Assumptions:
- Production will be in your personal kitchen or workshop, therefore no rent expense will be incurred.
- Use the fixed amount of $100 per month for the additional utility expense that will be incurred in the production of your product.
- No additional major machinery/equipment will need to be purchased. Small tools and equipment such as hammers or cookie sheets may be lumped together. They will be considered to have a limited one-year life with no salvage value.
- The federal minimum wage should be used as the labor cost per hour.
- Assume no indirect labor.
- Requirements:
- The written portion of the project should be 5-6 pages, including the spreadsheets (but not including the cover page)
- The written portion to include:
- Why product was chosen?
- How cost was derived (where materials were obtained, etc.)?
- How was the price determined?
- Why your classmates should purchase your product? (Sell it – this part should be fun!)
