Assume you are running a business and must manufacture a product to sell. For this assignment, you will need to create a product and document the relevant costs. That means you will need to gather raw materials, supply the labor and overhead, and create the product. For instance, you can bake a cake, create a floral arrangement, build a birdhouse, make a doorstopper, make jewelry, etc.
Prepare a plan of what is done during each step in the manufacturing process, and most importantly, an accounting for the cost of the materials, labor, and overhead that goes into the finished product.
Write a three to five page analysis, detailing how the product's cost was determined. You will need to explain how the direct and indirect costs were calculated and what assumptions were used. A job cost sheet and a breakdown of costs are required. Include the total product cost and selling price of the product. Remember to be creative and innovative!
Address the following questions:
•What is the relationship of product cost to the financial statements?
•What is the purpose of creating a schedule of cost of goods manufactured? How does this schedule relate to the income statement?
•Are there ways to reduce certain costs in your product's manufacturing process? For instance, could you outsource certain areas of production? If so, would be cost effective to do so?•What alternative ways exist for allocating overhead to your product?