ACC3MAC Assignment 1: Tiny House Business Plan Analysis

This assignment presents a comprehensive business plan for a tiny house company, designed for the year 2100 on Mars. It details the product/service offered, focusing on tiny houses constructed from natural and lightweight materials, emphasizing movability and space efficiency. The plan outlines the company's vision and purpose, targeting medium-income individuals. The core of the assignment involves estimating direct and indirect costs, including material and labor costs, as well as overhead expenses. A master budget is constructed, along with the assumptions made. Finally, the assignment includes a reflection on the knowledge and skills acquired, emphasizing the importance of construction awareness, material selection, and budget preparation. The project also includes references and an appendix with market research data to support cost estimations.

Running Head: TINY HOUSE
House available company
Performance management
Tiny House
Student details:
4/13/2019

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Contents
Product/service offered................................................................................................................................2
Vision......................................................................................................................................................3
Purpose....................................................................................................................................................3
Goal activity............................................................................................................................................3
Estimating Direct Cost................................................................................................................................3
Estimating overhead Cost-...........................................................................................................................6
Master budget of one month operation-.......................................................................................................7
Reflection on knowledge and skills learnt from this assignment.................................................................8
References...................................................................................................................................................9
Appendix: Evidence of making some market research to arrive at estimation...........................................11

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Product/service offered
In 2100 century, there is more probability that earth will become one of the most crowded
planets of the universe. Hence, there are more chances that people will start shifting towards the
nearest planet which is Mars. After shifting to Mars, one of the most important things which will
become an essential portion of their life will be requirement of the house (The tiny life, 2019). In
this situation, house available company will play one of the most significant roles of offering tiny
house to this section of the population.
The main objective is to offer tiny houses in small budgets because the material used in
developing tiny house will be mainly from natural resources and lightweight. This kind of
product will offer two types of benefit to the target audience, one benefit will be its movability
due to its lightweight and second benefit will be its space usage (Windriver, 2019). It can be said

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that less space usage will become the USP of this business and will help in forming a unique
image in the construction business.
Vision
The main vision of this house available company is to become one of the largest
construction house companies on Mars which have the capability to offer the most innovative
house on the soil of Mars.
Purpose
Purpose is to offer most creative house to the medium level income public on Mars
within cheapest cost that will occupy less space.
Goal activity
Buying a house is always considered as a big burden in the life of every individual
because it directly impacts the whole financial budget of an individual. In this situation goal
activity to make use of such material in constructing the house which is available in cheapest rate
along with making proper use of every corner of the house in the most creative and innovative
way.
Estimating Direct Cost
The direct cost refers to the cost, which may be totally attributed to manufacturing of the
particular service or product. The direct cost includes the direct material cost and direct labor
cost. The direct labor is the temporary help and help of workers who do work in the direct
manner over the products of producer. The direct cost involves the wages and marginal benefit of
the direct labor workers. In this way, it is the cost related to temporary work in a direct manner

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on the goods of producer. The direct labor cost is also known as prime cost, cost of production
and conversion cost (Nwachukwu, et. al, 2015).
Further, the direct material is the raw material, which become product’s part. The direct
material cost refers to the cost of direct material. The direct material cost may be simply
recognized with the production’s unit. For an example, the glass’s cost is considered as direct
material cost in the production of tube lights. In the estimation of direct material and direct labor
cost of building of tiny house, following cost will be considered-
Estimating direct cost
Direct Material Cost Amount
Wood 1000
Sun mica 400
MS Pipes 500
Iron Nails 50
Fibre glass 150
Interior 250
Cement stands 50
Sill plates 200
Other material 100
Total direct material 2700
Labour Cost Amount
Skilled
Engineers (5 days*2*$100 per day) 1000

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Designer (2 days*$50 per day) 100
Car painter (25 days*$20 per day*2
members) 1000
2100
Unskilled
Peon 100
Other workers 500
600
Total labour cost 2700
Direct cost 5400
The cost estimation is fundamental activity. In the process of estimation of direct cost to
build tiny house, the direct material cost and direct labor cost to make tiny house is considered.
While constructing tiny house, the wood, Sun mica, MS pipes, iron nails, fiber glass, and
materials related to interior, cement stands, sill plates and other material would be the direct
material. The estimated direct material cost would be 2700$. Further, the direct labor cost will
include skilled labor cost and unskilled labor cost (Renfro & Sargent, 2016). The skilled labor
cost will cover engineering cost, designer’s cost and cost to car painters. The unskilled labor cost
will cover peon’s cost and cost of other workers. The estimated direct labor cost would be 2700$.
In this way, the estimated direct cost to build tiny house would be 5400$ (Refer appendix for
evidence of conducting market research to arrive at estimation).

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Estimating overhead Cost-
The overhead cost refers to the expenditures that are related with running the business, which
cannot be connected to making and manufacturing the goods and service. The overhead cost
includes the fixed overhead cost and variable overhead cost. The fixed overhead cost refers to the
cost to operate the business (Globerson, 2017). The fixed overhead cost is not directly associated
with manufacturing if the products or delivery of the services. The fixed overheads range from
rent to administrative cost. Further, the variable overheads are the costs of manufacturing, which
differ unevenly regarding the changes in manufacturing output (Shcherbina & Tamulevičienė,
2016). Following costs will be considered in an estimation of fixed overhead expenses and
variable overhead expenses-
Estimating overheads
Variable overhead Amount
water ($5*25 days) 125
gas ($35*25 days) 875
Electric power ($38*25
days) 950
Total variable overhead 1950
Fixed Overhead Amount
depreciation on machines 300
insurance 400
Salary to supervisor 300
Total fixed overhead 1000

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Total overhead 2950
In the process of estimation of overhead cost to build tiny house, the fixed overhead cost
and variable overhead cost to make tiny house is considered. When constructing tiny house,
water, gas and electric power would be the variable overheads. The estimated variable overhead
cost will be 1950$. Further, Depreciation on machinery, insurance and salary to supervisor
would be the fixed overhead. The estimated fixed overhead cost will be 1000$. Total overhead
cost would be 2950$ (Refer appendix for evidence of conducting market research to arrive at
estimation).
Master budget of one month operation-
Master budget
Particulars
Amoun
t
Sales 10020
less: Cost of goods
sold (5400+2950) 8350
Profit @ 20% 1670
Following assumptions are made while making the master budget-
1. Sale will be constant during whole period of budget.

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2. The variable cost per unit is constant during whole period of budget.
3. Sales mix is constant at the time of selling more than one product
4. The fixed cost is constant as whole (Narvy, et. al, 2016).
Reflection on knowledge and skills learnt from this assignment
From doing this assignment, I came to know that the knowledge and skills are required to
build the tiny house. I realized that the construction work requires lot of awareness and
attentiveness. One is required to choose materials and overheads as per the requirement and the
budget. I also understood that how to prepare master budget and what are the assumptions to
make master budget (Cai, et. al, 2017).

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References
Cai, M., Wu, Y., Chen, H., Yang, X., Qiang, Y., & Han, L. (2017). Cost‐performance analysis of
perovskite solar modules. Advanced Science, 4(1), 1600269.
Globerson, S. (2017). Using the earned value approach for controlling overhead cost in
construction projects. The Journal of Modern Project Management, 5(2).
Narvy, S. J., Didinger, T. C., Lehoang, D., Vangsness Jr, C. T., Tibone, J. E., Hatch III, G. F.
R., ... & Gamradt, S. C. (2016). Direct cost analysis of outpatient arthroscopic rotator cuff
repair in Medicare and non-Medicare populations. Orthopaedic journal of sports
medicine, 4(10), 2325967116668829.
Nwachukwu, B. U., McLawhorn, A. S., Simon, M. S., Hamid, K. S., Demetracopoulos, C. A.,
Deland, J. T., & Ellis, S. J. (2015). Management of end-stage ankle arthritis: cost-utility
analysis using direct and indirect costs. JBJS, 97(14), 1159-1172.
Renfro, L. A., & Sargent, D. J. (2016). Statistical controversies in clinical research: basket trials,
umbrella trials, and other master protocols: a review and examples. Annals of
Oncology, 28(1), 34-43.
Shcherbina, G., & Tamulevičienė, D. (2016). Budget formation and implementation in Ukrainian
companies: empirical study. Science and studies of accounting and finance: problems
and perspectives, 10(1), 162-176.

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The tiny life. (2019). What is the tiny house movement [online]. Retrieved from:
https://thetinylife.com/what-is-the-tiny-house-movement/
Windriver. (2019) our vision [online]. Retrieved from:
https://www.windrivertinyhomes.com/our-vision

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Appendix: Evidence of making some market research to arrive at estimation

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