Mini- case study: Global Green Book Publisher

a).Type of direct costs identified

Direct costs are those costs which vary with the level of production. Types of
direct costs identified are;
Material costs these includes all permission costs for contents and images used
in the eBook. These costs are direct costs because they are directly connected to
publishing of each eBook.
b) Two forms of costs identified are;

Direct costs these are direct costs attributable to production of each

eBook which includes; permission cost for the content in the book and the
cost of images used in publishing each eBook.
Indirect costs these are those costs that Global Green Book Publisher
cannot connect to a specific eBook produced. These costs are; computer
costs incurred and the sales commission for each eBook project.

c).possible problems that might arise and impact the budget.

Unrealistic assumptions when budgeting may lead to failure in budgeting.

Change in economic conditions may lender the budget unrealistic.
Inadequate resources may lead the budget hard to achieve.

d). Global Green Book Publisher should set aside contingencies during budgeting
for Catering additional costs or unexpected costs during budgeting process.
When the budget exceed the estimates, more sources of cash should be sorted
or the budget should be reduced to fit the estimates.
e) Main cost drivers in the project;

Direct hours worked

Permission needed
Inspection costs
Scanners installing costs
Selling of the books
marketing
Number of orders processed
Machine hours
machine acquisitions

f). other information that need to be included in the project includes;

Industry standards- industry standards should be considered in order to

make the budget
realistic
number of books sold in order to determine the amount of sales
commission and the total amount of sales

Past budgets- this will help in predicting the future

Hours for acquiring permission for the calculation of total direct permission
cost.
Number of permission in order to calculate total permission costs.

European History eBook project budget

Phase
Receiving order

Task
Receive
Check
Verify

Rate ($)
$12
$12
$16

Plan

Plan
Assign
Estimation
Reserve
equipment

Production

Manage
production

28
28
28
28

Hours
0.25
0.50
1
Total
1
1
1
0.5

Total ($)
$3
$6
$16
$25
$28
$28
$28
$14

Permission
Publishing
Content
conversion
Produce
Quality check

$22
18
12.5

Total
0
12.5
4

$98
$22
$225
$50

Tracking

$28

5
3
1
Total
3

$90
$48
$16
$429
$84

Total direct
cost

$636

18
16
16

Production overhead
Production overhead at $1.50 on all direct labour costs
Receiving labour cost $25*1.50 = $37.50
Planning labour cost $98 * 1.50 =$147
Production labour cost $429*1.50 = $643.50
Managing production labour cost $84*1.50 = $$126
Total production overhead =($37.50 + $147 + $643.50 $126) = $954
Indirect costs
Material costs of $1,000 per permission
Equipment costs of $800
Subcontract labour of $500

Computer costs of $600

Contingency on labour (10%*$954) = $95.40
Contingency on permission (20% * 1000) = $200
Total indirect cost = $3195.40
Total costs (direct + indirect costs)
= $3195.40 + $954 + $636) = $4785.40