New
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Lesson 5 of 12
  • Year 11

Costing

I can explain how a range of factors affect product costing in industry.

Lesson 5 of 12
New
New
  • Year 11

Costing

I can explain how a range of factors affect product costing in industry.

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Lesson details

Key learning points

  1. Product costs go beyond materials - they include labour, overhead, and other expenses.
  2. Costs are influenced by internal factors and external factors.
  3. Businesses set prices by managing expenses.

Keywords

  • Economies of scale - as production increases, the cost per unit decreases

  • Overhead - the ongoing cost of running a business

  • Automation - use of technology to perform tasks

Common misconception

The cost of a product only concerns raw materials.

Other factors like labour, overhead, distribution, and economies of scale affect the cost of a product.


To help you plan your year 11 design and technology lesson on: Costing, download all teaching resources for free and adapt to suit your pupils' needs...

This lesson is a good opportunity to introduce maths in D&T questions that are related to costing e.g. percentages. Calculators are permitted.
Teacher tip

Equipment

Calculator (optional)

Licence

This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).

Lesson video

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Prior knowledge starter quiz

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6 Questions

Q1.
A design is a statement that outlines the requirements of a product.

Correct Answer: brief

Q2.
What is the main purpose of market research?

To guess what customers want
Correct answer: To gather information about customer needs and preferences
To create advertising campaigns
To reduce production costs

Q3.
Which of the following materials would not be suitable for a child’s lunchbox?

BPA-free plastic
Stainless steel
Correct answer: Glass
Soft fabric

Q4.
A company sells a product for £30, and the cost to make it is £18. How much profit do they make per unit?

£10
Correct answer: £12
£14
£16

Q5.
Which of the following is NOT a cost businesses need to consider?

Raw materials
Wages for workers
Correct answer: The customer’s personal budget
Rent for the factory

Q6.
Why do businesses set different prices for similar products?

Some businesses just like charging more money.
Correct answer: Prices depend on costs, competition, and customer demand.
Expensive products are always better quality.
Businesses guess how much people will pay.

Assessment exit quiz

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6 Questions

Q1.
A business sets its price by considering the cost of materials, labour, overhead, and ...

Competitor pricing
Correct answer: Marketing and distribution
The CEO’s salary
Government regulations

Q2.
Which of the following is an example of a direct cost?

Electricity for the factory
Correct answer: Worker wages for producing goods
Office supplies for management
Advertising costs

Q3.
Which of the following are linked to external costing factors?

Employee productivity
Material quality
Correct answer: Supply chain disruptions

Q4.
Put the following steps of product costing in the correct order:

1 - Add direct costs (materials, labour)
2 - Calculate the overhead costs (e.g. rent, utilities)
3 - Set the price based on total costs and market factors
4 - Add profit margin to the final price

Q5.
When a business produces more units of a product, it can lower the cost per unit due to __________.

Correct answer: Economies of scale
Profit margin
Customer loyalty

Q6.
How does automation typically affect the costs of producing a product?

It increases direct labour costs but lowers material costs.
Correct answer: It reduces the need for labour and can lower production costs overall.
It increases the price of materials.
It has no impact on production costs.