Running head: Lego Project 1
Lego Project 2
Lego Project (Selling Price, Production Process, Production Cost, DM Breakdown, Total Overhead)
Name
Institutional Affiliation
Date of Submission
Lego Project (Selling Price, Production Process, Production Cost, DM Breakdown, Total Overhead)
Introduction:
In this Lego Project, the name of the creation will be advertised, marketed as well as sold in the market using the term “Lets be innovative while playing this is because, in considering the word Lego, it originates from another Danish word “Leg godt whose meaning is typically played well. In this regard, therefore, in instances where we utilize the term innovative for the product, then this term will assist us in attracting the customers while taking into consideration three aspects which include: Giving adequate time to individuals to enjoy while at work, capable of bringing in the innovation within the minds and this in turn help in transforming Lego into some structure in addition to being cheap (Chaudron, 2018).
Costing of the product:
The product costing structure is displayed in the below paragraph. In this display, it is essential to note that all the direct costs which further takes into consideration the direct material costs, the direct labour costs as well as the manufacturing overhead costs have been taken into consideration based on the given proposal. However, the three products have also been taken into consideration, such that in case the piece isnt a plate as well as a standard Lego brick, then the same is considered a unique report. Therefore, this means that it will be charged higher (Mishra, 2017). The Selling, distribution as well as the general administrative expenses that will be incurred on selling as well as the marketing of the product has also been taken into consideration to be 15% of the overall production costs.
Calculations
Direct Labor Cost
Direct Labor Cost: Direct labour costs are recorded at 60% of your total explicit materials cost.
Therefore, the Direct Labor Costs for each product will be:
Lego Plates= 60/100 x 5= 3.00
Lego Bricks = 60/100 x 8= 4.80
Lego Special Pieces = 60/100 x 10= 6.00
Manufacturing Overhead Cost
Manufacturing Overhead Cost: Manufacturing overhead costs are recorded at 45% of your direct labour cost.
Therefore, the Manufacturing Overhead Cost for each product will be:
Lego Plates= 45/100 x 3= 1.35
Lego Bricks = 45/100 x 4.8= 2.16
Lego Special Pieces = 45/100 x 6= 2.70
Calculation of Total Production Cost
The Total Production Cost is calculated as follows:
Total Production Cost= Material Cost + Direct Labour cost + Manufacturing overhead cost.
Therefore, the Total Production Cost for each product will be:
Lego Plates= 5.00+ 3.00 + 1.35= 9.35
Lego Bricks = 8.00 + 4.80 + 2.16 = 14.96
Lego Special Pieces = 10.00 + 6.00 + 2.70 = 18.70
In this case, the SG&A costs are assumed for each product; this is added to the Total Production Cost to obtain the Total costs of sales.
Therefore, the total costs of sales for each product will be:
Lego Plates= 9.35 + 1.40= 10.75
Lego Bricks = 14.96 + 2.24= 17.20
Lego Special Pieces = 18.70 + 2.81= 21.51
Calculation of Sales Price
As mentioned above, the selling price of each of the products has been fixed such that it is 12% higher than the overall cost of sales. Therefore, the sale price for each product will be:
Lego Plates= 112/100 x 10.75= 12.04
Lego Bricks = 112/100 x 17.20= 19.27
Lego Special Pieces = 112/100 x 21.51= 24.09
Profit
The Profit is obtained by subtracting the Total costs of sales from the Sale price.
Profit = Sale price- Total costs of sales
Therefore, the Profit for each product will be:
Lego Plates= 12.04- 10.75 = 1.29
Lego Bricks = 19.27- 17.20 = 2.06
Lego Special Pieces = 24.09- 21.51 = 2.58
The table below indicates the Pricing of the Product.
Product Costing Structure
Pricing of the product
(Amt. in cents)
Particulars
Lego Plates
Lego Bricks
Lego Special Pieces
Material cost
5.00
8.00
10.00
Direct Labour cost
3.00
4.80
6.00
Manufacturing overhead cost
1.35
2.16
2.70
Total Production costs
9.35
14.96
18.70
SG&A costs (assumed)
1.40
2.24
2.81
Total costs of sales
10.75
17.20
21.51
Sales Price
12.04
19.27
24.09
Profit
1.29
2.06
2.58
Profit %
10.71%
10.71%
10.71%
Pricing of the product:
In this regard, the price of each of the products has been fixed such that it is 12% higher than the overall cost of sales; this fixation will result in a 10.71% net margin to the company on all the products. Therefore, in this regard, the pricing has been done to keep the rates competitive because the average price of the Lego plates in the market stands at 20-25 cents (Erik & Jan 2017). Therefore, these prices will give an edge to the company. In circumstances where the company is selling fewer pieces, then the company will be able to maintain and make profits while selling the most basic model which in this case is the Lego plates (Bygstad & Iden, 2017).
Types of the products:
In this case, the main costs to be taken into consideration in the product cost may be categorized into the fixed price as well as variable costs. Within that, various components will be included, and this takes into consideration the following:
1. Direct Material costs
2. Direct Labour costs
3. Production or manufacturing overhead costs/
4. Research and development costs.
5. Packing cost (Choy, 2018)
6. Forwarding cost including freight and logistics costs.
7. Advertisement and publicity costs.
8. Rental costs of the warehouse
9. Administration costs of the office personnel
10. IT costs including computer expenses which are like fixed costs (Olcay, 2019)
References
Chaudron, R. F. (2018). Bank’s interest rate risk and profitability in a prolonged environment of low-interest rates. Journal of Banking & Finance, 89, 94-104. doi: 10.1016/j.jbankfin.2018.01.007
Choy, Y. K. (2018). Cost-benefit analysis, values, wellbeing and ethics: An Indigenous worldview analysis. Ecological Economics, 145, 1-9. doi: 10.1016/j.ecolecon.2017.08.005
Hofmann, E., & Bosshard, J. (2017). Supply chain management and activity-based costing. International Journal of Physical Distribution & Logistics Management, 47(8), 712-735. doi:10.1108/ijpdlm-04-2017-0158
Mishra, C. S. (2017). Creating and sustaining competitive advantage. doi:10.1007/978-3-319-54540-0
Olcay, G. A. (2019). Book review: Energy, complexity and wealth maximization. Technological Forecasting and Social Change, 143, 353-355. doi: 10.1016/j.techfore.2018.04.030
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Accounting Lego Project (With Example Project Attached) Concept Idea: A Box OR Whatever [PowerPoint with Charts/Graphs/FlowChart, Excel Calculations, Written Deliverable]
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LegoProjectEXAMPLE1_W-OUTPowerPointandEXCEL_Accounting2102LegoProject.edited.docx
Home>Business & Finance homework help>Accounting homework help>Accounting Lego Project (With Example Project Attached) Concept Idea: A Box OR Whatever [PowerPoint with Charts/Graphs/FlowChart, Excel Calculations, Written Deliverable]
Running head: Lego Project 1
Lego Project 2
Lego Project (Selling Price, Production Process, Production Cost, DM Breakdown, Total Overhead)
Name
Institutional Affiliation
Date of Submission
Lego Project (Selling Price, Production Process, Production Cost, DM Breakdown, Total Overhead)
Introduction:
In this Lego Project, the name of the creation will be advertised, marketed as well as sold in the market using the term “Lets be innovative while playing this is because, in considering the word Lego, it originates from another Danish word “Leg godt whose meaning is typically played well. In this regard, therefore, in instances where we utilize the term innovative for the product, then this term will assist us in attracting the customers while taking into consideration three aspects which include: Giving adequate time to individuals to enjoy while at work, capable of bringing in the innovation within the minds and this in turn help in transforming Lego into some structure in addition to being cheap (Chaudron, 2018).
Costing of the product:
The product costing structure is displayed in the below paragraph. In this display, it is essential to note that all the direct costs which further takes into consideration the direct material costs, the direct labour costs as well as the manufacturing overhead costs have been taken into consideration based on the given proposal. However, the three products have also been taken into consideration, such that in case the piece isnt a plate as well as a standard Lego brick, then the same is considered a unique report. Therefore, this means that it will be charged higher (Mishra, 2017). The Selling, distribution as well as the general administrative expenses that will be incurred on selling as well as the marketing of the product has also been taken into consideration to be 15% of the overall production costs.
Calculations
Direct Labor Cost
Direct Labor Cost: Direct labour costs are recorded at 60% of your total explicit materials cost.
Therefore, the Direct Labor Costs for each product will be:
Lego Plates= 60/100 x 5= 3.00
Lego Bricks = 60/100 x 8= 4.80
Lego Special Pieces = 60/100 x 10= 6.00
Manufacturing Overhead Cost
Manufacturing Overhead Cost: Manufacturing overhead costs are recorded at 45% of your direct labour cost.
Therefore, the Manufacturing Overhead Cost for each product will be:
Lego Plates= 45/100 x 3= 1.35
Lego Bricks = 45/100 x 4.8= 2.16
Lego Special Pieces = 45/100 x 6= 2.70
Calculation of Total Production Cost
The Total Production Cost is calculated as follows:
Total Production Cost= Material Cost + Direct Labour cost + Manufacturing overhead cost.
Therefore, the Total Production Cost for each product will be:
Lego Plates= 5.00+ 3.00 + 1.35= 9.35
Lego Bricks = 8.00 + 4.80 + 2.16 = 14.96
Lego Special Pieces = 10.00 + 6.00 + 2.70 = 18.70
In this case, the SG&A costs are assumed for each product; this is added to the Total Production Cost to obtain the Total costs of sales.
Therefore, the total costs of sales for each product will be:
Lego Plates= 9.35 + 1.40= 10.75
Lego Bricks = 14.96 + 2.24= 17.20
Lego Special Pieces = 18.70 + 2.81= 21.51
Calculation of Sales Price
As mentioned above, the selling price of each of the products has been fixed such that it is 12% higher than the overall cost of sales. Therefore, the sale price for each product will be:
Lego Plates= 112/100 x 10.75= 12.04
Lego Bricks = 112/100 x 17.20= 19.27
Lego Special Pieces = 112/100 x 21.51= 24.09
Profit
The Profit is obtained by subtracting the Total costs of sales from the Sale price.
Profit = Sale price- Total costs of sales
Therefore, the Profit for each product will be:
Lego Plates= 12.04- 10.75 = 1.29
Lego Bricks = 19.27- 17.20 = 2.06
Lego Special Pieces = 24.09- 21.51 = 2.58
The table below indicates the Pricing of the Product.
Product Costing Structure
Pricing of the product
(Amt. in cents)
Particulars
Lego Plates
Lego Bricks
Lego Special Pieces
Material cost
5.00
8.00
10.00
Direct Labour cost
3.00
4.80
6.00
Manufacturing overhead cost
1.35
2.16
2.70
Total Production costs
9.35
14.96
18.70
SG&A costs (assumed)
1.40
2.24
2.81
Total costs of sales
10.75
17.20
21.51
Sales Price
12.04
19.27
24.09
Profit
1.29
2.06
2.58
Profit %
10.71%
10.71%
10.71%
Pricing of the product:
In this regard, the price of each of the products has been fixed such that it is 12% higher than the overall cost of sales; this fixation will result in a 10.71% net margin to the company on all the products. Therefore, in this regard, the pricing has been done to keep the rates competitive because the average price of the Lego plates in the market stands at 20-25 cents (Erik & Jan 2017). Therefore, these prices will give an edge to the company. In circumstances where the company is selling fewer pieces, then the company will be able to maintain and make profits while selling the most basic model which in this case is the Lego plates (Bygstad & Iden, 2017).
Types of the products:
In this case, the main costs to be taken into consideration in the product cost may be categorized into the fixed price as well as variable costs. Within that, various components will be included, and this takes into consideration the following:
1. Direct Material costs
2. Direct Labour costs
3. Production or manufacturing overhead costs/
4. Research and development costs.
5. Packing cost (Choy, 2018)
6. Forwarding cost including freight and logistics costs.
7. Advertisement and publicity costs.
8. Rental costs of the warehouse
9. Administration costs of the office personnel
10. IT costs including computer expenses which are like fixed costs (Olcay, 2019)
References
Chaudron, R. F. (2018). Bank’s interest rate risk and profitability in a prolonged environment of low-interest rates. Journal of Banking & Finance, 89, 94-104. doi: 10.1016/j.jbankfin.2018.01.007
Choy, Y. K. (2018). Cost-benefit analysis, values, wellbeing and ethics: An Indigenous worldview analysis. Ecological Economics, 145, 1-9. doi: 10.1016/j.ecolecon.2017.08.005
Hofmann, E., & Bosshard, J. (2017). Supply chain management and activity-based costing. International Journal of Physical Distribution & Logistics Management, 47(8), 712-735. doi:10.1108/ijpdlm-04-2017-0158
Mishra, C. S. (2017). Creating and sustaining competitive advantage. doi:10.1007/978-3-319-54540-0
Olcay, G. A. (2019). Book review: Energy, complexity and wealth maximization. Technological Forecasting and Social Change, 143, 353-355. doi: 10.1016/j.techfore.2018.04.030
Applied Sciences
Architecture and Design
Biology
Business & Finance
Chemistry
Computer Science
Geography
Geology
Education
Engineering
English
Environmental science
Spanish
Government
History
Human Resource Management
Information Systems
Law
Literature
Mathematics
Nursing
Physics
Political Science
Psychology
Reading
Science
Social Science
Home
Homework Answers
Blog
Archive
Tags
Reviews
Contact
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