Question

Estimate what fraction of the price of a pocket calculator is required to cover the cost of developing the product. To do this you might start by estimating the information needed to fill out Exhibit 1-3 for the pocket calculator.

Answer 1

The price of a pocket calculator required to cover the cost depends on various factors.

Example Company " A"is manufacturing pocket calculator.

• It requires Highly experienced production workers.
• Professional engineers in R&D team.
• Automation equipment.
• Quality control management .
• Durability of product.
• no.of workstation, employees.

Hence the total manufacturing cost of product is the sum of all costs whether the costs are directly or indirectly related to the actual manufacturing of the good or services.

So the

• Total Manufacturing Cost = Direct Labor Cost + Direct Materials Cost + Manufacturing Overhead cost.