Appraise the logic and applications used by Harsh Electricals to differentiate between their direct and indirect costs on one hand, and the fixed, variable and mixed costs on the other hand.

1. Appraise the logic and applications used by Harsh Electricals to differentiate between their direct and indirect costs on one hand, and the fixed, variable and mixed costs on the other hand.                                                              (CLO2- 10 Marks)
2. Estimate the profitability of each type of cooler that Harsh Electricals manufactures and calculation of their costs of goods sold.                 (CLO2- 15 Marks)
3. Produce an income statement, and critically evaluate the future changes Harsh Electricals can execute to improve their annual profit.         (CLO3- 15 Marks)

 3.2  Terms of Reference

As a GUIDE ONLY, this section outlines some of the aspects you may consider significant given the brief shown above. Your report should include:

• An analysis of literature to answer the assessment requirement 1.
• For requirements 2 and 3, you should consider the following:

-          provide a table that supports your comparison between costs objects and cost behavior,

-          use a table showing the breakdown of direct materials, direct Labor, and manufacturing overhead; for the calculation of profitability for each of the two products: Standard Model vs. Baleno Model,

-          detail the number of possible changes that can improve the future annual profit when justifying your final recommendations. This may include the addition of a new model using your own realistic assumptions.

-          include three worksheets in the excel file: ‘COGS’, ‘Income Statement’, ‘Possible changes’.

 There are two links to submit your required submissions as below:

1. 1.      Word Document: Word Count – 2,000 Words.
2. 2.      Excel File: including equations and results.