Accounting 2102 Lego Project (Selling Price, Production Process, Production Cost, DM Breakdown, Total Overhead)

Assume you are creating a Lego kit to resell. Also, assume that you are presenting this project to the Vice President of Product

and Marketing Development and the Vice President of Sales who requires a two page – back and front – deliverable. This

deliverable is worth 60% and the actual creation is worth 40%. Your deliverable should be a handout which will allow the VPs to

determine if the company wishes to invest in the product and sell the item in the company.

When determining the cost of the product, assume the following costs for the Lego bricks in determining the cost of your

creation:

Costing: Direct Materials Cost: Lego Plates: 5 cents each (these are the flat Lego pieces); Lego Bricks: 8 cents each; Lego Special

Pieces: 10 cents each (if the piece is not a plate or a normal Lego brick, it should be classified as a special piece

Direct Labor Cost: Direct labor costs are recorded at 60% of your total direct materials cost.

Manufacturing Overhead Cost: Manufacturing overhead costs are recorded at 45% of your direct labor cost.

Required: You should create a two-page deliverable in a professional manner that provides information about your

creation. Your deliverable will be judged on creativity and the informational content of the report You will be judged on the information you present about the creation you have built. At a minimum, your report should contain the following:

· A unique name for your creation along with the selling price of your Lego Kit. Make sure you use creativity in choosing the name of your creation. Explain why you have chosen this name.

· Clearly state the selling price you have set for your creation. Comment on the reasonableness of the selling price of your creation and explain how you calculated the selling price.

· A discussion of the types of costs associated with manufacturing the Legos for your creation. This does not include the dollar amount of costs, just the TYPES/DESCRIPTION of costs. Think through the manufacturing process and include all of the types of costs that you can identify that would be used in this manufacturing process – minimum ten different, unique types of costs. (Think about obvious types of items used in any manufacturing process.)

You MUST INCLUDE a flowchart depicting the manufacturing process WITH EACH STEP LABELED CLEARLY.

Instead of a flowchart, you could use another interesting approach for presenting the information in a diagram form.

Diagram in as much detail as you can, the process for your Lego creation from start to finish (finish being when you sell the product.

· Include in your written deliverable at least one picture of your creation in addition to the picture on the cover sheet.

· For distance students, Lego projects will be completed using the Lego Digital Designer 4.3 on Lego.com or using your own Legos. The Lego project will be an individual project for distance students. On campus students may not use the Lego Digital Designer. Distance students should include ONE ADDITIONAL PAGE THAT HAS ONLY A PICTURE OF THEIR CREATION ON IT AND THE NAME OF THE CREATION.

· Summarize all costs of production in a Production Cost Sheet format. You should show number of pieces in detail and show totals for all parts of the production process. Include your computation of selling price in this section as well. Make sure that this section is clearly presented.

– Selling Price Breakdown

– Production Process

– Production Cost 

– Direct Materials= Cost of Material for brick, =Cost of Packaging, =Cost of paint for brick  

– Direct Labor= Labor Cost for production of brick, = Labor Cost to paint brick specific color, = Labor Cost for packaging and checking for defects

– Overhead Cost= Depreciation on painting and manufacturing, = Factory utility expenses, = Indirect Materials needed to paint bricks, =Indirect Materials needed for package lego kit

Direct Material Breakdown

Total Cost of Good Manufactured and Selling Price breakdown 

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:

Lego Project Instructions

Fall 2020

Due Date: 11/16/20

The Lego Project will be due December 9th at 11:59PM

The purpose of this project is for you to reinforce the fundamentals of managerial accounting presented in ACCT 2102. You can do this in groups of two. On the coversheet on your written deliverable please include both names if you worked in a group. In addition, your cover sheet should contain the name of your creation and a picture of your creation. Please include both names on the PowerPoint as well.

You will be creating a Lego kit either by drawing or a Lego building website. The number of Legos per creation will differ for each group depending on the creation. You must use a minimum of 100 pieces to create your Lego creation. This project should not cost you any money you should be able to download the software off of Lego.com or draw your creation. If you find another website similar, you are free to be creative. If you have Legos, you may also build an actual structure.

Assume you are creating a Lego kit to resell. Also, assume that you are presenting this project to the Executive Vice President of Product and Marketing Development.

Grading: 20% actual creation 40% two-page written deliverable 40% presentation

Actual Creation 20 points

Written Deliverable 40 points

Presentation (PowerPoint and Presentation) 40 Points

Total Points 100 Points

Your deliverable and presentation will be judged on both creativity and the informational content of the report. DO NOT SUBMIT A DELIVERABLE THAT RESEMEBLES JUST ANSWERING THE QUESTION IN ORDER OR THAT RESEMBLES A RESEARCH PAPER.

Direct Materials Cost:

Bricking Listing- Use this listing of Lego pieces to determine your material cost. Your only material used should be Lego pieces. Assume the following costs for the Lego bricks in determining the cost of your creation:

Lego Plates: 5 cents each

Lego Bricks: 8 cents each

Lego Special Pieces: 10 cents each (if the piece is not a plate or a normal Lego brick, it should be classified as a special price- any size or shape)

Direct

Labor Cost

: Direct labor cost are recorded at 25% of your total direct materials cost.

Manufacturing

Overhead Cost

: Manufacturing overhead costs are recorded at 30% of your direct labor cost.

Required: You should create a two-page maximum information sheet about the creation you build. The written deliverable should contain at a minimum the information listed below. However, it can not exceed two pages, thus you must also think about creativity when preparing your deliverable. You will also create a PowerPoint containing the following information and include a voice over power point in place of a presentation.

Remember you are trying to sell your project to the Executive Vice President of Product and Marketing Development; thus, you want to use creativity when presenting this information.

· A unique name for your creation along with the selling price of your Lego Kit. Make sure you use creativity in choosing the name of your creation. Comment on the reasonableness of the selling price of your creation and how you calculated the selling price.

· A discussion of the types of costs associated with manufacturing the Legos for your creation. This does not include the dollar amount of cost, just the TYPES of costs. Think through the manufacturing process and include all of the types of costs that you can identify that would be used in this manufacturing process. (Think about obvious types of items used in any manufacturing process.) You might draw a flowchart depicting the manufacturing process and comment on types of costs or use another interesting approach for presenting the information. Diagram in as much detail as you can, the manufacturing process of your Lego creation.

· Summarize all costs of production in a Production Cost Sheet format. One possible format is shown below (feel free to add any parts to the list that you might need- customize the list to your creation):

COST/UNIT

TOTAL COST

1X1

2X2

2X4

2X6

2X8

2X10

QUANTITY USED

COST/UNIT

TOTAL COST

PLATES LISTED BY SIZE	QUANITITY USED			COST/UNIT			TOTAL COST
	1X1
	2X2
2X3
	2X4
	2X6
	2X8
	2X10
4X4
4X6
4X10
# OF UNIQUE PLATES USED	SUBTOTAL (A)
BRICKS LISTED BY SIZE		QUANTITY USED
1X2
1X3
1X4
1X8
# OF UNIQUE BRICKS USED	SUBTOTAL (B)
SPECIAL PARTS- LIST BY DESCRIPTION
# OF UNIQUE SPECIAL PARTS	SUBTOTAL (C)
TOTAL MATERIALS COST (A) + (B) + (C)
Labor Cost	25% of total direct materials cost
Overhead Cost	30% of direct labor cost
Total Cost
Plus markup (You must choose your markup percentage)
Total Selling Price

· Include in your written deliverable and presentation at least two pictures. One picture should be a picture of your kit “in process.” The second picture should be a picture of the actual creation. Your deliverable will be strengthened if you present several pictures (preferably in various stages).

· Identify and explain (with references to your particular project) five concepts covered in class or in your book which would help when producing and costing your creation. Do not use project cost (DM, DL, or MOH) as part of this question. These types of costs are covered above.

· Currently, there is a discussion about the effect of plastics on the future of our planet. Include a section in your presentation and deliverable that discusses whether or not it is possible to offer sustainable Lego products. Provide a list of any resource that you use in answering this question.