Choose a beer that you would like to manufacture. You do not actually need to manufacture the beer, but will proceed through the assignment as if you were planning on manufacturing it. It should require materials and labor and be something that you are familiar with. It must be useful and marketable. Consider production as if you were making the product from beginning to end, and not as if using a kit.
Perform the following steps:
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- Describe the manufacturing process.
- Prepare the following budgets for 1 quarter, broken down monthly, regarding your product: Classify all manufacturing costs and selling and administrative expenses as either variable or fixed.
- estimated sales budget
- estimated direct materials budget
- estimated direct labors budget
- estimated manufacturing overhead budget
- estimated selling and administrative expenses
- estimated income statement.
- Classify all manufacturing costs and selling and administrative expenses as either variable or fixed.
- Prepare a contribution margin income statement separating all variable and fixed costs into their own categories.
- Determine the breakeven point in units and dollars. Also determine the number of units and dollars that need to be sold to make a target profit of $5,000 a month.
- Identify what types of trends you should be aware of in the industry and who the primary competitors are.
- Answer the following question: If you had to improve the bottom line, what would you do and what concerns would you have going forward?
- Choose a piece of equipment that you might consider purchasing to increase production of your item and address the following questions: What types of capital budgeting factors would you look at when deciding whether to do this? What would be the relevant costs that you would consider in this decision?
Your project should be in the form of a paper, using Microsoft Word, that addresses each of these different areas. Steps #1, 6, 7 and 8 will be in paragraph form and Steps #2, 3, 4 and 5 will involve numerical calculations that should be put into the form of a table in proper format and included as part of the paper.
This website offers some cost ideas, since it is simply an estimation of the costs: http://www.ucsdbrewingprogram.com/2014/09/09/how-much-for-that-pint/