Managerial Accounting - Project Select a product you wish to bake.  You may work with one other individual.  Submit idea to...

Managerial Accounting - Project

Select a product you wish to bake.  You may work with one other individual.  Submit idea to Instructor for approval. 

Determine what ingredients you would need and price them at your local store.  Prepare a Materials Requisition Slip for the items.

Example:

• Flour: Entire bag will cost you less than $2, but you probably will only use about $.75 worth.
• Chocolate Chips: One bag, $1.29
• Butter, One pound package is $2, but you only need half at $1

Prepare a Time Ticket for the labor used.  Labor  is to be charged at $8.38 per hour.  Assign your manufacturing overhead based on estimated direct labor hours, i.e. using a predetermined overhead rate.  Calculate the rate based on the estimated overhead costs of monthly rent $300 and monthly utilities $50, your estimated direct labor hours, and any administrative time estimated.

Complete a Job Cost Sheet for each item you are making. 

Price your product competitively.  Assuming a targeted profit of $500 for one month, determine how much of each item would be needed to be produced to reach your targeted goal.   What is your breakeven point?  

Summarize your product cost method indicating whether you used FIFO, LIFO, or Average Costing and why.  Discuss your over/under assignment of costs based on actual time used.  Prepare a Cost of Goods Manufactured Schedule.  Include a copy of all slips prepared. 

Prepare a two page formal written report (in summary form) explaining:

1. Prepare an introductory paragraph (5 points).
2. Product you chose – Be specific about your product (5 points).
3. Provide your estimation of direct labor hours you guess it will take to produce (5 points).
4. The predetermined overhead rate and show your calculation (8 points).
5. The assignment of your overhead.  Explain how you assigned the overhead (8 points).
6. Competitive pricing.  Give example of similar product and price (5 points).
7. Targeted goal.  Give details of the amount you need to make to reach the targeted goal which would provide a $500 for one month (10 points).
8. Breakeven point.  Give details of the calculation of how many you need to produce in order to break even (8 points).
9. Product costing method used and why.  Explain (5 points).
10. Discuss the over/under assignment of costs based on actual time used.  Once the actual time is known, you can determine the amount of over-applied or under-applied manufacturer overhead.  Explain your calculation. (8 points).
11. Prepare a formal Cost of Goods Manufactured Schedule.  Use correct headings. (5 points).
12. Include all prepared slips. (8 points).
13. Prepare a conclusion paragraph summarizing the appropriate information (5 points).
14. Bring in your prepared item for the class to share.  (15 points).

Note:  Prepare an introductory paragraph and a conclusion paragraph summarizing the appropriate information