Instructions:
Pretend
you are the Director of Plant Operations for a manufacturing company.
Choose a
product or service that would use job order costing and that you are familiar with.
You will represent the company who is providing this product or service to your
customer. Pretend that you have been selected as one of the companies your
client or customer is accepting bids on for a product/sale. They have multiple
companies that they can choose from, but they are interested in going with your
company.
However, they believe your price is too high. The Director
of Sales has called you in to give a presentation to your potential clients to
discuss with them (a) how your prices are set and (b) how your costs effect those price structures. Your job
is to help the clients ease their concerns that your costs are too high by explaining to them
why the costs are the way that they are. You should assume that your customer is highly
intelligent but not astute in manufacturing accounting or managerial accounting.
You need to prepare a written memo and a PowerPoint
presentation to them that explains the
following
items and answers the following questions:
•
Part I
Begin by focusing on the product that you will
be creating for this project.
1) What is the product/service you are
interested in manufacturing for your
customers?
2) How
much will your customers be willing to pay for this product/service?
3) How
much margin or profit do you want to ensure per unit sold?
4) What
might some of your selling costs be?
5) What might some of your general and
administrative costs be?
6) What
might some of your product/inventoriable costs be?
7) What
are your total anticipated costs?
8) Why
is your price set at the level it is currently set at?
•
Part II
o Write
out the process to manufacture the product/provide the service to the
customer.
Be detailed so you include all materials needed and the length of time
and
number of people required. Include the phases in the process that are
required
to produce the process. Be specific and clear here so that your
customer
has an appreciation of the manufacturing process that they are paying
for when
they obtain your product.
• Part III
Explain how you will track each of the three types of costs
for this product.
•
Define the direct materials involved in the job and how you
account for
those as
well as your estimated cost.
•
Define the direct labor involved in the job and how you
will account for
those as
well as your estimated costs.
•
Define the manufacturing overhead costs involved in the job
and how
you will
account for those as well as your estimated costs.
•
Your 3 Categories need to be explained and defined.
•
They also need to be estimated with support.
•Part IV
o
Reflect on this process.
o Expect
your customer to ask the following questions:
·
Why does job costing make sense for this product or
service?
·
Why are your prices fair for this product?
·
What happens if they want to increase the quantity or units
involved?
❖ You
will produce an Official Letter/Proposal and a PowerPoint presentation.
❖ Your
Official Letter/Proposal to the client will be done in Word.
·
This document should be 3 Pages Minimum and be single-spaced.
·
This document should be professionally prepared as if it
were going to a customer or
client
that is considering your services (given the context listed above)
