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Cases

Ohjelma
Bike Lease Finland

Bike Lease Finland

Leasing and maintenance of employee bicycles, digital services.

Ohjelma
Excelence Solutions

Excelence Solutions

Consulting and data analytics, expert services and consulting.

Ohjelma
Finnish Timber Oy

Finnish Timber Oy

Ecological log buildings and construction site processes, project business.

Ohjelma
Green Scape

Green Scape

Customized green wall services for B2B clients, service business.

Ohjelma
Marine Craft

Marine Craft

Customized motorboats, project delivery, manufacturing industry.

Ohjelma
Scandinavian Design

Scandinavian Design

Leasing and maintenance of company bicycles, digital services.

Task

Cost Calculation Model



In this task, the student builds a simple cost calculation model for a case company for one product or service. They list the key cost items, divide them into variable and fixed costs, and describe in words how the total cost is formed. Finally, the student reflects on pricing and profitability based on the model and summarizes the key conclusions. The task reinforces understanding of cost structure and its impact on the company's financial result.

Learning objectives

After completing the task, the student:
1. Can identify the key cost items related to the case company's product or service.
2. Can distinguish costs into variable and fixed costs.
3. Understands the structure of a simple cost calculation model and its connection to pricing and profitability.
4. Can make justified observations and development suggestions based on the cost calculation.

Step by step

  1. Cost accounting model

    Objective:
    The objective of the assignment is that the student is able to build a simple cost calculation model for one product or service for the case company. The aim is to learn to distinguish variable costs and fixed costs and to understand how they affect pricing and profitability.

    Materials:

    • The case description of your selected case company from the learning material.

    • The assignment is based on the information in the case description (industry, products/services, resources) and on moderate, logical assumptions made regarding the cost structure.

    Assignment steps (instructions for the student):

    1. Choose the product or service to be examined
      Choose one clear product or service from the case company for which the cost calculation model will be created (e.g. one service package, product, course, project).
      Briefly describe (5–7 sentences) what is delivered to the customer, to what extent, and in what manner.

    2. List all significant cost items
      Begin by listing as comprehensively as possible all the costs incurred in producing the product/service. Consider for example:

      • materials and subcontracting

      • working time (staff salaries and ancillary costs)

      • premises and equipment

      • marketing and sales

      • other costs (e.g. travel expenses, licences, packaging).
        Write a couple of sentences for each cost item: where it arises and how it relates to the process.

    3. Differentiate variable and fixed costs
      Divide the identified cost items into two categories:

      • variable costs (directly dependent on sales volume, e.g. materials per unit sold, sales commissions)

      • fixed costs (do not change directly with additional sales, e.g. rent, base salaries of permanent employees, depreciation of equipment).
        Briefly justify for each item why you classify it as variable or fixed.

    4. Create a simple cost calculation model
      Prepare a text-based model describing:

      • variable costs per unit sold (e.g. “materials + direct labour + commission”)

      • the amount of fixed costs for the review period (e.g. month, year)

      • how the total cost is formed (verbally: “total cost = variable costs × sales volume + fixed costs”).
        You may use example figures if they support the understanding of the model, but the core of the assignment is in describing the model and its structure, not in precise calculation.

    5. Reflect on pricing and profitability based on the model
      Write ½–1 page of reflection on what the cost calculation model indicates regarding pricing and profitability. Answer at least:

      • what are the most important cost items to pay attention to

      • what factor makes the product/service most susceptible to losses (e.g. high material cost, low volume)

      • how the case company could improve profitability (e.g. increasing volume, reducing costs, adjusting the price).

    6. Summarise the model as a “management summary”
      Finally write a summary of about 5–7 sentences that could be presented to the management of the case company. State:

      • which product/service the model relates to

      • what are the key variable and fixed cost items

      • what is the most important conclusion regarding profitability and pricing.

    Submission and evaluation:
    Submit a text of about 1–2 pages that shows:

    • the selected product or service and its short description

    • the identified cost items and their division into variable and fixed costs

    • a verbal cost calculation model (how the total cost is formed)

    • reflection on pricing and profitability as well as a concise summary.

    In the evaluation, attention is paid to how well you:

    • identify the key cost items of the product/service

    • logically distinguish between variable and fixed costs

    • describe the structure of the cost calculation model clearly

    • draw well-reasoned conclusions regarding pricing and profitability.

    Recommended working time: about 45–60 minutes, alone or in pairs.

Tasks by audience and theme

University of applied sciences

Polytechnics and higher education studies.

68 tasks