Develop the full cost of a simple item. 1. Choose a simple, everyday household i

Develop the full cost of a simple item.
1. Choose a simple, everyday household item (i.e. loaf of bread, fabric placemat,
broom) to investigate its full cost.
2. Describe the product and why it was chosen.
3. Identify all direct and indirect materials used in production.
4. Identify the different production stages and the labor requirements for each stage.
5. Calculate the overhead.
6. You will use the material, labor, and overhead amounts to calculate the production
cost per unit.
7. Find the selling price for your product.
8. Assumptions:
a. Production will be in your personal kitchen or workshop, therefore no rent
expense will be incurred.
b. Use the fixed amount of $150 per month for the additional utilities expense
that will be incurred in the production of your product.
c. No additional major machinery/equipment will need to be purchased. Small
tools and equipment such as hammers or cookie sheets may be lumped
together. They will be considered to have a limited one-year life with no
salvage value.
d. The labor cost is $10 per hour.
e. Assume no indirect labor.
9. Requirements:
a. Written portion of the project should be 5-6 pages, including the spreadsheets
(but not including the cover page) and the following information
i. Why was the product chosen?
ii. How cost was derived (where materials were obtained, etc.)?
iii. How was the price determined?
iv. Why should your classmates purchase your product? (Sell it – this part
should be fun!)