Question

Draw a Product Structure Diagram from the bill of material for a Xavier Skateboard as shown below. Assuming a 10% profit Margin, how should the Xavier be priced? Show your costs per item and total cost Item Level 1 2 Quantity Unit Cost Total Cost 3 0 0 1 I 1 1 1 $54.90 4.95 Skateboard Deck Grip Tape Wheel Assembly Wheels Bearings Truck Nuts & Bolts Riser 1 1 2 2 4. 2 2 2 1 8.95 4.95 33.90 1.99 3.95 1 1 @ 4 2 Bearings Truck o Riser Deck Nuts & Bolts Wheels Components of Xavier Skateboard

Draw a Product Structure Diagram from the bill of material for a Xavier Skateboard as shown below.

Assuming a 10% profit Margin, how should the Xavier be priced? Show your costs per item and total cost

Level				Item	Quantity	Unit Cost	Total Cost
0	1	2	3
0				Skateboard	1
	1			Deck	1		$54.90
	1			Grip Tape	1		4.95
	1			Wheel Assembly	2
		2		Wheels	2		8.95
		2		Bearings	4		4.95
		2		Truck	1		33.90
	1			Nuts & Bolts	4		1.99
	1			Riser	2		3.95

Show the cost calculation for the Wheel Assembly

Item	Quantity	Unit Price	Total Price

Item	Quantity	Unit Cost	Total Cost
Skateboard	1
Deck	1		$54.90
Grip Tape	1		4.95
Wheel Assembly	2
Wheels	2		8.95
Bearings	4		4.95
Truck	1		33.90
Nuts & Bolts	4		1.99
Riser	2		3.95
	Profit Margin
	Selling Price

Draw Product Tree Here

Answer 1

Product Tree is as follows:

Skateboard Deck Grip Tape Wheel Assembly (2) Nuts & Bolts (4) Riser (2) Wheels (2) Bearings (4) Truck

------------------------------

Unit cost for each item, wherever Total cost is given = Total Cost / Quantity

Unit cost of Wheel Assembly = SUM of Total cost of Wheels, Bearings and Truck .= 8.95+4.95+33.90 = 47.8

Unit cost of Skateboard = SUM of  Total Cost of all components.

Selling price = Total cost / (1 - Profit margin %)   (considering that profit margin is % of selling price)

= 209.19/(1-0.1)

= $ 232.43

Profit margin ($) = Selling price - Total cost

= 232.43-209.19

= $ 23.24

Resulting completed table is following:

E 1 1 A 1 Item 2 Skateboard 3 Deck 4 Grip Tape 5 Wheel Assembly 6 Wheels 7 Bearings 8 Truck 9 Nuts & Bolts 10 Riser B C D Quantity Unit Cost Total Cost 209.19 209.19 1 54.90 54.90 4.95 4.95 2 47.80 95.60 2 4.48 8.95 4 1.24 4.95 33.90 33.90 4 0.50 1.99 2 1.98 3.95 Profit Margin 23.241 Selling Price 232.43 1 11 12 13 14

EXCEL FORMULA:

Item	Quantity	Unit Cost	Total Cost
Skateboard	1	=SUM(D3:D10)	=B2*C2
Deck	1	=D3/B3	54.9
Grip Tape	1	=D4/B4	4.95
Wheel Assembly	2	=SUM(D6:D8)	=B5*C5
Wheels	2	=D6/B6	8.95
Bearings	4	=D7/B7	4.95
Truck	1	=D8/B8	33.9
Nuts & Bolts	4	=D9/B9	1.99
Riser	2	=D10/B10	3.95
	Profit Margin		=D12-D2
	Selling Price		=D2/(1-10%)