Establishment of a company dealing with the manufacture of insulated electric wires for industrial use. The primary objective will be to ensure production of quality wires for both local and foreign markets. Capital for the establishment of the manufacturing plant and procurement of raw materials is required. The capital will be sourced from a credible creditor ( Ketokivi et al., 2017 ). JP Morgan is the most suitable; this is because their interest rates are sustainable and that the bank can be able to provide the intensive capital required for the establishment of the company.
Several costs will be incurred. They range from the cost of buying the necessary machinery, the procurement of raw materials, rent, operation fee, and utility, depreciation of the processing plant premises, legal fees, employees' fee, operation fee and licensing fees. Further, the costs are divided into either; period or product cost. Product costs include the cost of procuring raw materials and the machinery, labor, and money set aside for industrial operating price (Rosen & Wang 2015). The period costs include; expenses on administration, rent, supplies of the processing plant and the utilities. Direct costs include; the costs of the machinery, raw materials, labor, rent, etc. indirect costs, on the other hand, consist of; the cost of depreciation of the premises, salaries for supervisors among many more (Seppala & Ali, 2017).
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The direct materials required include; a processing machine, raw materials which consist of polythene and copper. Direct labor will consist of skilled electric engineers, technical staff to aid the engineers, marketing and salesmen and women to distribute the products to the market (Black & Kohser, 2017). The manufacturing overhead costs include the cost of rent and depreciation of the premises and the equipment, utilities and the costs of maintenance of the processing plant.
References
Black, J. T., & Kohser, R. A. (2017). DeGarmo's materials and processes in manufacturing . John Wiley & Sons.
Ketokivi, M., Turkulainen, V., Seppälä, T., Rouvinen, P., & Ali-Yrkkö, J. (2017). Why locate manufacturing in a high-cost country? A case study of 35 production location decisions. Journal of Operations Management , 49 , 20-30.
Wu, D., Rosen, D. W., Wang, L., & Schaefer, D. (2015). Cloud-based design and manufacturing: A new paradigm in digital production and design innovation. Computer-Aided Design , 59 , 1-14.
