For this assignment, students will compile the information they’ve gathered in Project Parts 1-3 and provide a final draft.
Part 1:
Select a product to manufacture. The product should be a simple one, requiring only one or two raw materials and two or three manufacturing steps. For example, a craft item may be created from a single piece of wood; a cut or two, some paint and then assembly creates a final product.
Next, estimate the three basic cost elements involved in manufacturing the product. Direct material and direct labor should be relatively straightforward. Assume you have a small manufacturing company producing only this product. Keeping overhead simple, estimate the overhead costs of this small company. Then determine which of the company’s costs are fixed and which of the costs are variable. Consider how you will include diversity, equity and inclusion in your company and write a paragraph or two explaining how you will utilize these concepts in your business.
Part 2:
Determine your company’s sales price per unit and the number of units sold during the period. Determine the total sales.
Create a contribution margin income statement for your company. Use the variable and fixed costs that you determined in Project Assignment One.
What is your company’s contribution margin per unit?
What is your company’s contribution margin ratio?
What is your company’s breakeven point in unit sales?
What is your company’s breakeven point in dollar sales?
Determine the target profit you would like your company to achieve in the upcoming period. Estimate the number of units you will need to sell to achieve that target profit.
Part 3:
Create a sales budget and production budget for your company based on the target profit you determined in Project Assignment Two. An example of a sales and production budget can be found in Chapter Eight on page 379.
Part 4:
Please review the corrections that have been made by your instructor Parts 1-3 of the project. Please update the Parts 1-3 of the project to include these corrections and submit the entire project
