Make up some numbers for materials and labor and transfer costs to Work In Process, Finished Goods and then to Cost of Goods Sold using the same format as the examples in your book.

For example: I would like to make and sell key fobs. What would be my costs? I need fabric, the hardware, a sewing machine, thread, pliers, a place to sew and a place to sell them. Fabric is about $$8$ a yard and I can get $50$ fobs from a yard. I also need interfacing, which is about the same price. So that comes to $80$ cents per fob. The hardware costs about $20$ cents each. Make a table $-$ one column is the stuff $-$ fabric, thread, etc. The second column list the cost of that stuff. The third column use to classify each item as product or period.

Then decide how many you'll make in a month, take your numbers and make journal entries for work in process, finished goods $-$ when the product is completed $-$ and then the journal entry for when you sell them.

B$-$Suppose a customer offers you a huge contract for your product $($from the first assignment$).$ This customer will pay you $10\%$ less than your normal charge, but will order $5,000$ units of your product. Using CVP analysis and the costs that you established in Assignment One, should you take the offer or not? $($This is a special order decision.$)$

This requires you to think about the costs $-$ will you lose money $-$ along with other considerations $-$ is this a customer who will bring enough business in the future to make it worth losing money now? Is it your favorite uncle and you can't say no and still be invited to the family reunion?.

C$-$using the same information youve established previously, create a master budget for the next quarter.Think about a product you would like to manufacture. It doesnt have to be real, it can be anything you want. Then, list the costs involved in making that product and classify them as product or period costs.