Assignment 2: Cost Drivers

By the due date assigned, respond to the following in the Discussion Area below:

Remember, the information you gather in this assignment will contribute to your final project due in Module 5.

This module you are learning about cost drivers. You will be adding costs to your budget. You want to consider several types of expenses.

• What materials and labor will be necessary to produce your product for sale?
• What overhead costs will be necessary?

Based on your estimates, continue your table started in your Module 2 discussion. Add a section for direct materials’ costs, direct labor costs, and overhead costs. At this point, you are only considering costs directly required to produce your product or service. You are not considering indirect costs, such as office rent and advertising expenses. Make sure you describe how you are determining each amount. For instance, with labor, how many employees do you anticipate needing and what will you be paying each employee? For materials, what materials are necessary, how much of each material will be needed, and what will the cost be? Once you have completed this section of your budget, your table should reflect the sales dollars anticipated and the direct costs necessary to earn those sales. At this point in the budget process, you are now able to add the projected gross profit to your budget (sales – cost of goods sold). Include your table as an attachment to your initial discussion response.

Be sure to cite any sources using APA style. You may use this APA Citation Helper as a guide.

Through the end of the module, provide substantive responses to at least two other students' initial posts.

Assignment 2: Calculating Revenue

By the due date assigned, respond to the following in the Discussion Area below:

Before identifying costs in a new business, it is necessary to calculate revenue. All costs will be based on your anticipated revenue because costs are generated based on what it takes to produce the product for sale. This module you are going to think about your new business and determine what the first year in sales looks like.

• Describe what product or service you will be selling.
• How much will you charge for your product or service?
• How many units of the product or service do you anticipate being able to sell over the first year?

This is a good time to dream, but also to be realistic. The beginning period in any company is challenging and realistic planning is crucial for success. Based on your estimates, build a table, in Microsoft Excel, showing the quantities sold of each item or service, the dollar amount charged for each, and the total anticipated revenue. Your table should reflect sales by the month and then an annual total. Include your table as an attachment to your initial discussion response.

Remember, the information you gather in this assignment will contribute to your final project due in Module 5.