Question

• This is not an easy task and we want you to try your best to access as much information to break down the cost of producing one of your products. Your product may be so scaled/efficient that it costs pennies to produce. If that is the case, we are fine if you select a larger bundle of several of the products like soft drinks or one piece candy - these might be too 'small'. That's your task to show us the following in your post:

• Identify the variable costs of producing your product

• Identify the fixed costs

• Identify the administrative costs

• Identify the marketing costs

• Then, from my lecture (hint hint) try to figure out the cost to produce one unit

• You can use any source you want - "real" sources include the 10K of your company (the SEC's annual report) often breaks down costs. You can use IBIS reports to generalize about the industry's costs. You can use whatever you want, but......cite your sources.

Answer 1

Suppose variable cost is 10$ per unit.

Fixed cost - $15,000

Administration cost - $5,000

Marketting cost - $1 per unit.

Say we produced 1,000 units in a time period.

So total cost will be

= 10,000+15,000+5,000+1,000

= $31,000

Cost to produce one unit

= 31,000/1,000

= $31 per unit.

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