Calculate the cost of direct materials purchased

Reference no: EM132375280 , Length: word count:1000

Individual Assignment -

Relevant Subject Learning Intended Outcomes - Describe, analyse and evaluate various costs types and cost behaviours.

Rationale - In this subject, you will develop your understanding of the elements of cost and management accounting, which provides organisations with relevant cost-related information to assist with their planning, controlling and decision-making. You will examine the process of identifying, determining, classifying, analysing and allocating costs to products and services. This assessment task gives you the opportunity to demonstrate and apply your understanding of product design and costing in a practical manner.

Task - You are required to design a product (not service) of your choice. It might be an existing product with your take on it or a new product that does not exist in the market. You need to undertake R&D to determine the design, characteristics and functions of your product, calculate its upstream cost, and provide an explanation as to why you want to produce this product. Then, you need to identify and determine your product's production and downstream costs for 50,000 units manufactured. Finally, you need to determine the price of your product and how it will be marketed.

Please confirm your product with your workshop facilitator during week 4 workshop.

Instructions -

1. Design your product and provide it a name and a description and visual/picture of it (this can be your own drawing or an image from the internet with your brand/logo assigned to the image). Explain why you selected your product (i.e. is there a demand for it? will it solve any social, environmental or financial issues? etc.).

2. Calculate your products R&D costs (as you will be undertaking the R&D, assign yourself an hourly wage rate based on market research and keep a record of the activities and how many hours it took you to design your product. This will determine your R&D cost). Provide detailed explanations about your R&D processes/steps.

3. Undertake market research (i.e. search the internet) to identify, estimate and determine the cost of your product's direct materials, direct labour and manufacturing overheads (fixed and variable). Clearly list and determine how much and types of materials, labour and overhead will be required to produce one unit of your product and calculate your products per unit cost. Explain the approach used to calculate the overhead cost per unit and clearly differentiate/list fixed and variable manufacturing overheads.

4. During the month of January, the cost of your beginning inventory was $5,000 and ending inventory equalled $5,000, and you purchased materials to produce 50,000 units of your product. Calculate the cost of direct materials purchased and used in production for the month of January.

5. During the month of January, the cost of your beginning work in process was $30,000, and ending was $30,000. Calculate the cost of goods manufactured using a cost of goods manufactured statement/schedule (for 50,000 units of your product) for the month of January.

6. During January, the cost of your beginning finished goods was $50,000 and ending finished goods equalled $50,000. Prepare a cost of goods sold statement for the month of January for 50,000 units produced and sold to customers.

7. Determine the price of your product per unit and explain in detail how you determined the price (i.e. cost base used, the pricing method).

8. Undertake market research to identify and estimate your downstream activities and costs (i.e. marketing, packaging, handling, distribution and so forth) and explain in detail how you will market and distribute your product.

9. Prepare an income statement (using absorption costing) for the month of January for the 50,000 units sold. Your administrative expenses in January totalled $2,000, and company tax rate is 30%. Include all other relevant expenses for the month of January.

Reference no: EM132375280

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Reviews

len2375280

9/23/2019 11:39:37 PM

Word Limit: Approximately 1,000 words (excluding references). Submission Requirements - You need to present and submit the above requirements as a report using Word. The first page of your report should be a cover page with the subject code, your name and student ID and the name of your product. The second page should be a table of contents. The body of the report will include the requirements above (1-9) and each requirement needs to be clearly numbered. The last page should include your reference list in alphabetical order. You need to include references for the resources you used and referred to as part of your market research to determine your products costs, price etc. Please use the APA referencing style (please refer to the library resources if you need guidance with this style). The report needs to be page numbered and presented in a professional and well-formatted manner. Please ensure to provide full and correct statement headings with month and year for the cost of goods manufactured statement, cost of goods sold statement and income statement.

len2375280

9/23/2019 11:39:30 PM

Marking Rubric - Provides a detailed description with reasonable explanations for selecting and designing the product and its functions/characteristics, and some discussion about social, environmental or economic implications of product. Assigns themselves a reasonable and realistic hourly wage rate (based on market research) and provides some evidence of keeping a record of the hours spent to design the product to determine the R&D costs. Provides reasonable explanations of the R&D process and steps. All relevant materials, labour and overhead types/requirements of the product have been identified and their costs have been estimated using some market research and are realistic and appropriate for the product. Clear explanations were provided for the determination of the costs. Calculates the cost of direct materials purchased and used based on the direct materials cost determined in requirement 3. Calculates the cost of goods manufactured based on the product costs determined in requirements 3 and 4 with limited errors using the correct cost of goods manufactured statement structure.

len2375280

9/23/2019 11:39:20 PM

Calculates the cost of goods sold based on the product costs determined in requirements 3 and 4 with limited errors using the correct cost of goods sold statement structure. Determines a reasonable and realistic product price based on market research with some explanations of how the price was determined and calculated (i.e. clearly explains the cost base use and pricing approach). Majority of the downstream activities have been identified and explained and their costs have been estimated using some market research and are realistic and appropriate for the product. Clear explanations were provided for the determination of the marketing and distribution methods and costs. Prepares an income statement using the absorption costing format/structure, including most of the other additional information in requirement 9. The report structure reads well and meets majority of the submission requirements. Correctly uses APA style referencing and reference list is in alphabetical order.

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