$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!


Explain Determination of Production Cost.



Determination of Production Cost

The production cost is the expenses incurred by the business while manufacturing a product or producing a service. The cost of production includes Material Costs, Labor Costs, Factory costs etc (Horngren). Here in the given case study to determine the production costs certain assumptions are made because the information provided lacks completeness.


The Assumptions that are made for the case study is given below:

The material costs of a Duplo block is $2000.00 but it is given that for each subsequent increase in quantity cost will decrease by $25.00. So there are 10 possible material costs depending upon the quantity purchased.

It is assumed that for each unit of ichibutsu it will require one labor.

It is assumed that for producing one unit one oven is required so the equipment costs per unit is $4000.00.

Factory overhead costs are the indirect costs incurred by the business (Marshall). Factory overhead costs depend on the table rented and each table costs $10000.00. It is assumed that each unit of ichibutsu will require one table.

The total production cost per unit is calculated on 10 possibilities depending on the number of units material purchased. As the minimum batch of production is of 6 units, so at least 6 units of material will be purchased at a time. It is clear from the statement that as unit of material purchased increases, the cost per unit of material is decreased so all other costs remaining the same. Cost of production decreases with increase in number of material purchased.

Determination of Work in Progress and Finished Goods

The Work in Progress means the total amount of material and labor used for unfinished product in process (DRURY). The Finished goods may be defined as the goods that are completely manufactured and are ready for sale (Hilton). In the case study details regarding WIP and FG are not provided so it is necessary to make some logical assumptions.  For the purpose of this study it is assumed that at all times company will maintain double the quantity purchased in FG so that sales are not affected. The WIP is always maintained at quantity purchased but it cannot be less than 6. This assumption is important for determining holding costs.


Revenue is the amount of money that the company can earn by selling its products or services (Kaplan). In the given case company can earn revenue of $6000.00 per unit by selling product on time and in case of delay it can earn revenue of $4500.00 per unit. It is assumed that always enough Finished Goods will be maintained so that sales can be made on time. Therefore sale price will be $6000.00. 

Statement showing Calculation

Statement showing calculation of profit per unit

Units Purchased






WIP Unit






FG unit






Material Costs






Labor Costs






Equipment Costs






Factory Overhead






Total Production Cost






Holding Costs






Total Costs


















The profit is the reward for undertaking risk (Guenther). The profit earned is calculated by adding all costs then deducting it from revenue.


On analyzing the above statement it can be concluded that profit is maximum of $279.20 per unit when 8 units are purchased and produced.  Therefore it is advised that eight units should be purchased.



The cost system of the company shows that material and labor forms the major part of costs. In material a discount of $25.00 is provided for increase in each successive unit. It is recommended that quantum of discount should also increase with increase in purchase of each successive units. Then the company will be able to enjoy more discounts thus increasing profits. The labor costs are a huge component of costs and measures should be undertaken to reduce the same. The Holding costs of inventory are the variable component of costs it increases with increase in inventory. Therefore to control this costs it is important to develop a plan for inventory management. 



DRURY, COLIN M. Management and cost accounting. Springer, 2013.

Guenther, Edeltraud, et al. "Material Flow Cost Accounting–looking back and ahead." Journal of Cleaner Production 108 (2015): 1249-1254.

Hilton, Ronald W. Managerial accounting. New York: McGraw-Hill, 1991.

Horngren, Charles T. Cost accounting: A managerial emphasis, 13/e. Pearson Education India, 2009.

Kaplan, Robert S., and Anthony A. Atkinson. Advanced management accounting. PHI Learning, 2015.

Marshall, David H., Wayne W. McManus, and Daniel F. Viele. Accounting. McGraw-Hill Irwin,, 2011. 


Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2017). Determination Of Production Cost. Retrieved from

"Determination Of Production Cost." My Assignment Help, 2017,

My Assignment Help (2017) Determination Of Production Cost [Online]. Available from:
[Accessed 21 February 2020].

My Assignment Help. 'Determination Of Production Cost' (My Assignment Help, 2017) <> accessed 21 February 2020.

My Assignment Help. Determination Of Production Cost [Internet]. My Assignment Help. 2017 [cited 21 February 2020]. Available from:

With time, has become one of the best college essay writing services. Our all rounded services give students the confidence to overcome assignment related issues. Our services are fast enough to meet most urgent deadlines. We are capable of delivering fast essay writing services with the help of our specially designed provisions and writers' teams. Our urgent essay help services guarantee most rapid delivery of assignment solutions. Some of our most popular essay services are application essay help, exploratory essay help, literary review essay help and argumentative essay help.

Latest Accounting Samples

ACC518-Current Developments In Accounting Thought

Download : 0 | Pages : 11
  • Course Code: ACC518
  • University: Charles Sturt University
  • Country: Australia

Answer: 1.According to the article by Elizabeth Knight, Myer’s is trying to incorporate a new way in the marketing of its products to ensure that it remains productive. In the business sector there are large budgetary plans that are set year after year with the aims of increasing sales and getting new customers. According to Elizabeth Knight plans need appropriate strategies in the implementation with good and strong fiscal management te...

Read More arrow

HA2032-Financial Accounting Information Voluntarily

Download : 0 | Pages : 8
  • Course Code: HA2032
  • University: Holmes Institute
  • Country: Australia

Answers: Introduction In this project, we have prepared a brief analysis of whether disclosure of accounting policies should be regulated or not. Further, we have explained that how AASB has taken part in making the global accounting standards and what are the reasons that some of the countries are not following the IFRS accounting standards. Further, in this project, we have discussed the Owners’ Equity and the Debt equity ratio of Nuf...

Read More arrow

HA2042-Accounting Information System For Blundstone Footwear Company

Download : 0 | Pages : 15
  • Course Code: HA2042
  • University: Holmes Institute
  • Country: Australia

Answer: Introduction For any reputable organization, the aspect or function of a proper accounting system is a matter that cannot be ignored. In Australia, and the world over the regulation of accounting standards have continuously been fostered so as to curb the vices which normally arise from financial misstatements. For this reason most organizations, irrespective of the level of transactions, have been keen in ensuring that they meet the ...

Read More arrow

HA2032-Corporate Regulations Of Financial Institutions

Download : 0 | Pages : 11
  • Course Code: HA2032
  • University: Holmes Institute
  • Country: Australia

Answer: Introduction Financial regulation is important to help in proper disclosure of financial information. This paper focus on the importance of financial regulation in the various companies. Financial regulation is important since it will increase the value of the auditors' professionalism. There are also certain key procedures for setting the accounting standards and this is to be done according to the Australian standards of accounting ...

Read More arrow

HI6025 Accounting For Intangibles For International Financial Reporting

Download : 0 | Pages : 8
  • Course Code: HI6025
  • University: Holmes Institute
  • Country: Australia

Answer: Introduction The following report has covered the contemporary issues related to the accounting of intangibles. The first article that has been selected is “The accounting treatment of intangibles – A critical review of the literature” written by Daniel and Anis (2011) in Accounting Forum. This article has been selected by our group, as it has covered the importance of intangible assets and how they are being ignored...

Read More arrow

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits




Overall Rating



Our Amazing Features


On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.


Plagiarism Free Work

Using reliable plagiarism detection software, only provide customized 100 percent original papers.


24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.


Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.


Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

610 Order Completed

100% Response Time

Cheryl Zhao

PhD in Statistics

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2632 Order Completed

100% Response Time

Albert Ambrosio

MSc in Nursing

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

93 Order Completed

100% Response Time

Jackson Mitchell

MiM (Masters in Management) in Supply Chain Management

New Jersey, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

752 Order Completed

100% Response Time

Hugh Cleave

Masters in Human Resource Management (MMgt, HRM)

Wellington, New Zealand

Hire Me

FREE Tools


Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.


Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.


Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability




Your Approx Earning

Live Review

Our Mission Client Satisfaction

I have been submitting few assignments to this platform. They are very professionals, very happy with the results.


User Id: 355073 - 21 Feb 2020


student rating student rating student rating student rating student rating

So happy to have found this service! I was in a pinch and they were able to assist in just a few hours!


User Id: 376804 - 21 Feb 2020


student rating student rating student rating student rating student rating

hi my expert i was not aware this review was pending however i am please to tell you that i got an A grade so thank again cant wait to book your services again


User Id: 270782 - 21 Feb 2020


student rating student rating student rating student rating student rating

excellent work! as always very pleased with my assignments and the timing of receiving it back.


User Id: 237278 - 21 Feb 2020


student rating student rating student rating student rating student rating
callback request mobile
Have any Query?