PART A:

Explain the following:

Labor Cost Per Unit:

Material Cost Per Unit:

Off-the-shelf Component Cost Per Unit:

Contract Manufacturing Cost per Unit:

Consumables Cost Per Unit:

Packaging Cost Per Unit:

Quantity of Units to be Manufactured:

Salaries:

Rent:

Advertising:

Depreciation:

PART B:

Given Data:

The price that the customer will pay per unit, P = $100

The quantity of units that can be sold in one year, Q = 50,000

Start Up Equipment Cost Capital C = $10,000

Total fixed costs to operate for one year, TFC = $40,000

Calculate The cost to manufacture one unit, V

For Direct Sales: The cost to manufacture one unit, V = P/2,

For Retailer Sales: The cost to manufacture one unit, V = P/4,

Calculate Total revenue, TR

For Direct Sales: TR = P Q

For Retailer Sales: TR = P/2 Q

Calculate To operate for one year the total cost, TC

Total Cost, TC = TFC + Q V

Calculate 5 years of Depreciation on starting equipment Capital C = D

Depreciation, D = C/5years

PART C:

• Fill up the Table below:

	First Year Income and Expenses
Costs Linked to Number of Units Manufactured
1	Labor Cost per Unit (man hours per unit hourly pay)
2	Materials Cost per Unit
3	Off-the-shelf Components Cost per Unit
4	Contract Manufacturing Costs per Unit
5	Consumables Cost per Unit
6	Packaging Cost per Unit
	Cost to Manufacture One Unit, V
7	Quantity of Units to be Manufactured, Q
	Total Cost to Manufacture All Units, VQ
	Sale price, 2V
	Total revenue, 2VQ
	Gross Income, 2VQ - VQ = VQ
Annual Costs not linked to Manufacturing
8	Salaries
9	Rent
10	Advertising
11	Depreciation, Capital Costs/5
	Others (estimate $30,000 for all other costs)
	Total Operating Expenses (Costs not linked the Manufacturing)
	Net Profit, Gross Income - Total Operating Expenses