Product Costing
To demonstrate your understanding of product costing this
Assignment requires you to:
1. Select a product for study e.g. from:
– Department stores (a product of reasonable complexity and mass produced)
– Supermarkets (you will be dealing with a high volume product)
– Food chains (you will need to include processing and servicing costs to the customer)
– Hardware stores (a substantial hardware item that has a significant
Number of parts/components)
– Heavy equipment (probably manufactured in a low- volume run, or specialized equipment)
– A product developed or studied during your Course
– Or use other appropriate products – after discussion with the lecturer.
4. Develop the cost structure and estimate the cost of this product.
5. Write the final report Product considerations: Products and Appliances:
• Choose a product from web site of Supermarket chain
• The product must have a selling price for benchmarking of your costing
The chosen product should have sufficient level of complexity in cost analysis, e.g. due to number of components, number of manufacturing steps, variety of cost items or special processes.
Developing the costs:
• What plant and materials will be required to produce the product?
• Would you purchase or hire the manufacturing equipment?
• What are the labour rates and overheads?
To demonstrate your learning in this subject:
• You may consider the apportionment of costs across the direct manufacturing and production departments of the organization and then fully apportion costs to the actual product.
• You may consider if there is more than one product being produced by the organization – you only have to cost one product, however
• You may wish to propose a profit margin (determined by your costs and selling price) and establish how many/much of the product needs to be sold to “break even”.
• In the short term would you see “volume” or “pricing” as the determiner of the “break-even” point?
Marking…