What is the process used to manufacture the product?

Using your favorite search engine, choose a product that you are interested in learning more about, including how the product is manufactured. After you have located information about the product, answer the following questions about it.

• What is a description of the product, and what company makes it?
• What is the process used to manufacture the product? Name the raw materials and indirect materials used in its manufacturing.
• Who would be considered direct and indirect labor in the making of this product, and why?
• Using the cost-plus pricing approach, what target selling price would you set for the product? Explain why you chose this price.
• Assume you are the owner of the company that produces the product. You have been offered the option to outsource the product’s component parts instead of making them. What cost factors would need to be considered? Does it make more financial sense to outsource these parts? Explain with examples/assumptions.
• Assume the product was being made on an old piece of machinery that is slowing down production and causing delayed completion times. You have been given the option to either buy a new replacement piece of machinery or have this current machine reworked/repaired. Which option would you chose? What factors would be considered? State all assumptions and be sure to describe how incremental analysis would be used to make this decision.

Sample Solution

Example:

Product: Electric Cars

1. Description: Electric cars are vehicles that use electricity stored in batteries as their source of power. Tesla is a leading manufacturer of electric cars.
2. Manufacturing Process: The manufacturing process for electric cars involves several steps, including the assembly of the body, installation of the battery, motor, and other components. Raw materials used in the production of electric cars include aluminum, steel, lithium-ion batteries, and copper wire. Indirect materials used in the production include tools, equipment, and electricity.
3. Direct labor for electric cars includes workers who directly work on the assembly line, such as welders and painters. Indirect labor includes workers such as supervisors and quality control inspectors who support the assembly process.
4. Using the cost-plus pricing approach, the target selling price for electric cars would be set by adding a markup percentage to the total cost of production. Assuming the total cost of production for an electric car is $30,000 and a markup percentage of 20%, the target selling price would be $36,000.
5. If the company were to outsource the production of component parts, cost factors that would need to be considered include the cost of transportation, quality of outsourced components, and potential risks associated with relying on third-party suppliers. It may make more financial sense to outsource these parts if the cost savings outweigh the risks.
6. If the old machinery is causing delays in production, it may make more sense to purchase a new replacement piece of machinery. Factors to consider when making this decision include the cost of the new machinery, the cost of repairing the old machinery, and the expected increase in production efficiency. Incremental…NEED A COMPREHENSIVE ANSWER? POST YOUR ORDER