Imagine, you are planning to start a new small, home-based business. You are going to make and sell a single food item. What is the food item that your business will sell? Assumptions: You are starting your business next month, so currently you have no beginning inventory of finished goods or raw materials. Also, there is no beginning balance for accounts payable or accounts receivable. Since the business is very small and home-based, there is no direct labor cost for your business. Labor wage (if any) is assumed to be fixed and part of MOH. All the manufacturing costs you incur for your business falls under any one of the two categories: direct material (DM) or MOH. (Remember indirect material part of MOH) To calculate the DM cost for your product, find out a simple recipe for the product you are planning to sell. You MUST NOT visit any physical store to collect any data. All information must be collected from the internet. If you can't find any information you need on the internet, make reasonable guesses. For each of your direct material fill out the following table. Make more copies of the table if necessary. You need to have a separate table for each direct material. Based on the recipe and information you have collected from the internet, calculate the total direct material cost for making one unit of your product. Now, we will calculate MOH costs for your business. Remember, Total MOH = Variable MOH+ Fixed MOH. Assume, indirect materials are the only thing included in your variable MOH. Identify some indirect materials for your product, and assume a rate of variable MOH cost for each unit of product. . You do not have to make any budget for indirect material. The variable MOH rate you have assumed in the previous table will be used for preparing the MOH budget. . Since depreciation is part of fixed MOH, we will now calculate depreciation expenses. To calculate depreciation expense, first, identify the equipment you will need to make your product. Next, find the cost(s) of the equipment from the internet. Then, make estimation(s) about useful life. Finally, calculate the depreciation expense per month using a straight-line depreciation method. Show your calculations in the following table. Add more rows in the table if necessary. Equipment Name Cost Useful Life Depreciation Expense Write down the total depreciation expense included in fixed MOH based on your calculations in the last table. . All the equipment you have identified above will be purchased in the first month of your business, i.e. in October 2020. . Identify all other monthly fixed MOH expenses for your business. Remember, it is a small, home-based business so you do not have to make many complicated assumptions. You have already calculated depreciation expense in the above table. List all fixed expenses, including depreciation expense calculated above, in the following table. Add more rows in the table as necessary. Fixed MOH Expense Item Name Fixed Expense Per Month Write down the total fixed MOH expense, including depreciation expense, based on the list you have prepared in the last table. Remember, Total selling and administrative (Sn'A) expense = Variable Sn'A + Fixed Sn'A Your variable Sn'A expense consists of only two items - delivery expense per unit and packaging cost per unit. Write your estimations about delivery expense per unit and packaging cost per unit in the following table. Also, add the two numbers to calculate total variable Sn'A expense for each unit of product. Your fixed advertising expense consists of only one item - facebook advertising expense. Write your estimation about your monthly facebook advertising expense. This is your total fixed Sn'A expense per month. Calculate your total variable expenses for each unit of product by adding the direct material cost per unit, variable MOH rate per unit, and variable Sn'A expense per unit of product. Calculate your selling price per unit by charging a 200% mark-up on per unit variable expense. 4 of 6