Home Field Advantage”
Lego Kit: “Home Field Advantage”
· Selling Price Breakdown:
Selling Price: $8.35
Price to Build: ($5.22)
Profit Margin: $3.13
· The selling price of “Home Field Advantage” is based on a profit margin of 60% which will contribute to the selling and other administrative expenses of the company. The price to build the Lego Kit is found by adding direct materials, direct labor, and applied overhead together. This Lego kit is relatively cheap to make due to no specialty pieces, allowing for a higher profit margin even while keeping the price low. It is a simple kit, however every little kid that watches college football will want to build their own stadium.
· Production Process:
Send completed bricks to packaging dept.
Bricks are
completed and sent to painting
Using the different colors, paint bricks
Put brick material into production
Send completed “Home Field Advantage” kit to be sold
Package bricks into helmet shaped boxes & check for defects
· Production Cost:
| Direct Materials | Direct Labor | Overhead Costs |
| – Cost of Material for Brick | -Labor cost for production of Brick | -Depreciation on painting and manufacturing equipment |
| -Cost of Packaging (Helmet shaped box) | -Labor cost to paint brick specific color | -Factory utility expenses |
| -Cost of Paint for Brick | -Labor cost for packaging and checking for defects | -Indirect Materials needed to paint bricks |
| -Indirect Materials needed to package Lego kit |
· Direct Material Breakdown:
|
Bricks Listed by Size & Color |
Quantity Used |
Cost/Unit |
Total Cost |
|
GREEN-12×24 |
3 | .04 | .12 |
|
GREEN 1×12 |
6 | .04 | .24 |
|
WHITE 1×12 |
22 | .04 | .88 |
|
YELLOW 1x2x5 |
4 | .04 | .16 |
|
YELLOW 1×12 |
12 | .04 | .48 |
|
YELLOW 1×8 |
2 | .04 | .08 |
| ORANGE 2X2 | 14 | .04 | .56 |
|
BLUE 2X2 |
15 | .04 | .60 |
|
TOTAL |
78 |
$3.12 |
· Total Cost of Goods Manufactured and Selling Price Breakdown:
| TOTAL MATERIAL COST | Broken down above | $3.12 |
| TOTAL LABOR COST | 50% of total DM cost | $1.56 |
| OVERHEAD COST | 35% of total DL cost | $0.54 |
| Total Cost | $5.22 | |
| Plus Mark Up of 60% | $3.13 | |
| Total Selling Price | $8.35 |
· In Progress Product:
· Final Product:
