ACC2CAD-Cost Accounting And Decision Making

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. 

Instruction

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.