You would like to start a business manufacturing a unique model of bicycle helmet. In preparation for an interview with the bank to discuss your financing needs, you need to provide the following information. A number of assumptions are required; clearly note all assumptions that you make.

Instructions

(a)

Identify the types of costs that would likely be involved in making this product.

(b)

Set up five columns as indicated.

	Product Costs
Item	Direct Materials	Direct Labor	Manufacturing Overhead	Period Costs

Classify the costs you identified in (a) into the manufacturing cost classifications of product costs (direct materials, direct labor, and manufacturing overhead) and period costs.

(c)	Assign hypothetical monthly dollar figures to the costs you identified in (a) and (b).
(d)	Assume you have no raw materials or work in process beginning or ending inventories. Prepare a projected cost of goods manufactured schedule for the first month of operations.

(e)	Project the number of helmets you expect to produce the first month of operations. Compute the cost to produce one bicycle helmet. Review the result to ensure it is reasonable; if not, return to part (c) and adjust the monthly dollar figures you assigned accordingly.
(f)	What type of cost accounting system will you likely use