BTEC Level 3 Unit 4: Applied Commercial and Quality Principles in Engineering Assignment Task

BTEC Level 3 Unit 4: Learning aims (s):

B: Explore activity-based costing as a method to control costs and to determine if an engineering product or service is profitable

BTEC Level 3 Unit 4: Vocatinoal Scenario pr Context:

You are working as a final year trainee engineer for a subsidiary company CovColl Electronics that specialises in infotainment systems for cars, trucks and buses of a well- known automotive company. Following successful securing the tender, you have been tasked with carrying out a full cost analysis and cost plans for the next generation cockpit to be installed in the all-electric Volvo FC truck that is due to be in the road in 2026.

As CovColl Electronics is already accustomed to providing cockpit solutions and with the success from previous project, you have now been asked to further investigate the solutions for the infotainment system for the all-electric Volvo FC truck to ensure that it is costed correctly and remains profitable with the minor adjustments you will be making to previously used systems.

BTEC Level 3 Unit 4 Tasks:

You then need to investigate:

a) how an engineering organisation allocates costs b) explore ways in which costs can be controlled within an engineering organisation. You will also use activity- based costing to identify any inefficiencies associated with the engineering activities.

To do this:

You have been provided with preliminary cost analysis document (Appendix 1) that outlines some of the financial information that was used from the previous successful project as a model to be used to determine an effective cost plan that will be used the Volvo all-electric FC truck.

Task 1

Produce a report that outline a full cost plan for the all- electric Volvo FC infotainment system. Your cost plan should include.

• Your objectives and expected outcomes.
• A clear outline of the how the costs have been determined including technology or innovations to be used to optimise the solutions.
• A brief overview of different methods that can be used control costs.
• Give reasons why ABC (Activity Based Costing) has been chosen as the preferred method for control costs.
• Investigate and report on the reasons why engineering organisations want to analyse and control costs, including how decision making can be influenced.

Task 2

From the given preliminary cost analysis document (Appendix 1), you will need to research and identify all the cost associated with sourcing, manufacturing, and engineering the infotainment system for the Volvo FC truck.

Your research will need to include how costs are allocated to individual activities such as;

• Direct costs Indirect costs
• Overhead cost Fixed costs
• Semi variable cost etc.

Use information provided in appendix 1 to complete and record an iterative activity-based costing analysis tool (excel) to generate an activity-based cost model for an engineering product or service. This costing exercise should include five stages:

• identifying activities
• assigning resource costs to activities
• identifying outputs
• assigning activity costs to outputs
• assigning activity cost pools.

Finally, you should reflect on your findings from your activity- based costing exercise then give your justification on

• How costs are categorised
• How you identified those cost areas that have the greatest impact on the profitability of the product or service that you have investigated
  evaluate your reasons for producing an activity-based cost model.

BTEC Level 3 Unit 4: Criteria