Description
Suppose you are researching how to start a business and are learning about the costs.
- To learn more about cost you decided to select 2 (two) companies one that uses job order and another process costing. For each of the two types of companies you selected from above, provide an example of each of the following costs your selected companies might incur. Fully explain your examples.
Direct material (list materials with hypothetical costs based on your research).
- Direct labor (Be specific with your description)
Manufacturing overhead (list expenses with hypothetical costs based on your research).
- Selling and administrative expense.
Suppose you have decided to start a business producing and selling a product of your choice answer the following questions related to your product:
- Briefly describe the product you would produce and sell. What market will you target this product for? (you must describe the targeted segment with specific description i.e., adults, with ages between such and such and an average income of
, or other details that relate to your suggested product) At what price would you sell your product? Make a projection of your sales in units for the first year of operations.
Make a detailed list of the materials needed with corresponding costs, to make your product. (Use the textbook and/or outside research as necessary.) detail the quantity of materials needed for the year? What is the cost of these materials?
- Make a list of expenses you would incur in your business venture. (Use the textbook and/or outside research as necessary.) Examples include rent, utilities, insurance, direct labor, manufacturing overhead costs and so on. Estimate the cost of each of these expenses per year.
- Classify all of your expenses as either fixed or variable. Based on these costs calculate how many units of your product you would need to sell to break even. Show your work.
- How much operating income would you like to earn in the first year? Calculate how many units you would need to sell to break even, and to meet your target profit (Use the formula with the costs that you established).
- How realistic is your potential venture? Do you think your target profit is achievable? If not, what can you change in your plan to make it work? Explain both scenarios.
- Using the textbook and/or the Internet, find resources that confirm the importance of budgeting to organizations and answer the questions below in essay format. Briefly describe your understanding of how and why managers use budgets.
What types of budget approaches are typically used in for-profit companies as opposed to non-profit organizations? Explain at least two different budget methods.
- What type of budget will you use for your company?
Describe a minimum of two similarities between a personal budget and a business budget.
