Three friends from Adelaide planning initiate a candle business. Their main product is called Memory Candles made with beeswax, organic coconut oil leaf and citronella essential oil. Memory Candles helps to reflect and remember the beautiful memories and fill your house with calmness. The background story of naming the candle as "Memory" is the owner of the business is three international students who far way from their loved ones. They always wanted lives with beautiful memories not with loneliness and goodbyes. That's initial motive them to design this product, they believe whatever happing on their customers life, they product helps the customers move forward with something lovely. 

 (Chloe Jane Creative, 2023)

The uniqueness of our product from other the candle is we don't include chemical f into the candle. Our product is naturally scented with honey and floral nectar, it's emitted negative iron to purify and clean the air quality. Our candle has longer burned time approximately 100 hours. Most specially to reduce the environment pollution, our product made from sustainable components. (Chittering Candle Company, 2023)

During past two years the demand for candles drastically increased, due to the COVID-19 pandemic. At that time people experience mental illness like anxiety, homesickness and depression. Because of the lockdowns, they are unable to travel anyway else, they had stay in their residences. lighting up a candle provide mental relaxes and calmness and reduce the stress-level in mind. Our product includes citronella oil, it's helps relax and clam the mind. That the main reason why we select the citronella as over fragrance. (Taylor, 2020)

 

Research and Development

Product 

There were several negotiations to decide whether we select beeswax or coconut wax. Beeswax and coconut wax are the most sustainable wax, both are non-toxic and burn clean and slowly (Beauty & Wellness, 2020). However, beeswax has brighter flam than the coconut wax. Finally, we decide to go forward with beeswax (Beauty & Wellness, 2020). Beeswax has it owns naturally scented with honey and floral nectar in the honeycomb. Beeswax is only that purify the air by emitting negative ions. (Chittering Candle Company, 2023)

Our product consists of 100% organic coconut oil and citronella essential oil. Because citronella oil helps to relax the mind. Our owner's decided to use only recyclable materials manufacture the product as wells to the packaging. Therefore, we used recycled candle jars to pour the wax and we used wooden lid for candle. Our product provides health benefits while giving extended burn time. (Chittering Candle Company, 2023) 

Costing

Research development is undertaken by the three owners of the business. the national minimum wage is 21.38 per hour or 812.60 per week as at 1^st of July 2022. Therefore, owners declared $45.00 per hour and on costs $6.072 per hour which they allocated annual base salary of $ 93,600. (SEEK, 2023)

 

The above table elaborates costing of research and development stage, it includes 4 test runs to make sure owners achieve their desired fragrance. the ratio of wax, coconut oil and citronella essential oil changed each test run to obtain the final product.

Manufacturing process

Strep 1 - measure amount of wax needed to melt down to prepare 6 candles and pour it to double boiler. It will melt within 10-15 minutes.

Step 2 - Meanwhile clean the candle jar with Isopropyl alcohol disinfectant to remove any impurities.

Step 3 - Label the candle jar with company logo, product details and all the relevant warnings.

Step 4 - after wax fully melted, add x among of fragrance oils to the wax. Stir it for few seconds.

Step 5 - the wick into attached int the candle jar before wax pours into the jar. To attach it, dip the wick into melting wax then quickly stick into the bottom of the jar. Wax will dry within five minutes.

Step 6 - place the wax to cool for few minutes and then measure the temperature on the thermometer reads 140 degrees before pouring it. Slowly pure it into the container. Slowly pour the relevant measure of wax into the containers. Leave small amount of wax in the boiler for topping of the candle. 

Step 7 - to secure the wick from drawn in the wax, place two chopsticks across the top of the container and sandwich the wick between the sticks. It will stay in same place for a while.

Step 8- Wax will dry up within 4 hours at room temperature. Then reheat the remaining wax pour it to the top of the candle if there is an unsightly top. Lastly cut the wick into half an inch.

According to the authority's advice and supervision, product burned safely and without any exploding or wick defects. 

Market research 

Direct Labour

This part further elaborates the manufacturing process, how many labour hours will take to produce the one batch of 6 candle. For processing workers base salary of $ 23 per hour.

To produce batch of six candles it only takes 36 minutes. Following table demonstrate the director labour costing according to our manufacture process. 

Direct Labour	Hours	Direct Labour	On Costed Labour	Total Labour
Step 1	0.25	$                5.75	$                       0.60	$             6.35
Step 2 to Step 5	0.1	$                2.30	$                       0.24	$             2.54
Step 6 to Step 7	0.08	$                1.90	$                       0.20	$             2.10
Step 8	0.17	$                3.91	$                       0.41	$             4.32
Total	0.6	$              13.86	$                       1.46	$           15.32

 

Direct Materials 

This table elaborate direct material cost.

• Beeswax (250g) $12.50 (Adelaide Honey Farms, 2023)
• Citronella essential oil (1 litter) $132 (N-essentials, 2023)
• Coconut oil (1 Litter) (N- essentials, 2023)
• Candle jars each $1.08.

Manufacturing Overhead

Business has lease out a place to start the manufacturing process another back-office work. One of the owner's suggested that business can rent two room her residence. From this area 60% of the premises use for manufacturing candles another other remanning area is for sale and administration. From utility bills business agreed to pay 50% of the utility bills. The owner's salary goes as managerial salary category. 

Now complete the answer by using the following information:

a) Upon the nature of your product, in  words, identify and justify appropriate type of product costing procedure

 b) Calculates the cost of direct materials purchased and used in production for the month of June for 1,000 units.

 c) Calculates the cost of goods manufactured using a cost of goods manufactured statement/schedule for 1,000 units for the month of June

 d) Prepares a cost of goods sold statement for the month of June for 1,000 units produced and sold to customers

 e)  Undertakes market research to identify and estimate the products downstream costs with explanations of how the product will be marketed and distributed.