NNK Enterprise a social enterprise company incorporated in Malaysia with the mission to advocate sustainable furniture. NNK Enterprise has two main outbounds which are Extendable Table and Assembling Service. NEW INVESTMENT The company was established since 2012, and will be celebrating its 11h anniversary next year. With that in mind, the board of directors proposed that NNK Enterprise to introduce Smart water Apps. The new product will be known as E-Table. In order to provide E-table, NNK Enterprise needs to invest on E-Table development which cost RM2,000,000 with required rate of return of 20%. The details of the new product line is as follows: Year Initial Cost and Book Value Annual Net After Tax Annual Net Income Cash flows OHN Min Main Operations Activities 0 1 2 3 4 5 $ Supporting Activities Inbound Basic Table top 2,000,000 Table legs Extended Table Top Smart Table top D Table legs Extended Table Top Order confirmation Order confirmation Order confirmation The financial year end for NNK Enterprise is December 31 every year. The company' Operational flows is as follows: Picking is is esses is Picking $ $ $ $ $ Process Packaging Packaging Assembling Packaging Planning & Budget for financial year 2023 300,000 $ 500,000 $ 800,000 $ 1,600,000 $ 2,000,000 $ Installation 18,000 30,000 48,000 96,000 120,000 Outbound 6 bottles pack 500ml mineral water E-table (Planning Year 2023) General Administrative, Finance, Human Resource Marketing & Promotion Research & Development Information Technology & Infrastructure Customized Labeling Water Botte For financial year 2021, Sales Department was assigned to achieve budgeted sales of 100,000 units and 30,000 subscribers respectively for Extendable Table and Assembling Service. It is also assumed that the selling price, direct material and direct labour cost remains the same as prior period, however overhead has been identified as follows: Overhead Depreciation of Computer & Equipments* Depreciation of Building* Utilities (Note A) Production cost (including water) ** Maintenance & Upkeep of Applications and Software** Indirect Labour Indirect Material Other staff cost Marketing and promotion Research & Development General administrative expenses Training cost Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Cost $300.000 $40,000 $700,000 $100,000 $400.000 Utilities Cost ($) 30,000 40,000 $100,000 $200,000 $200.000 50,000 70,000 60,000 85,000 90,000 95,000 55,000 45,000 50,000 30,000 700,000 $30,000 $200,000 $230,000 $100,000 Cost Behavior*** Fixed Cost Fixed Cost Semi Variable Cost Variable Cost Variable Cost Fixed Cost *75% of the company's computer & equipment, building, and utilities devoted to main operation activities, the remaining 25% used for selling and administrative function. Variable Cost Fixed Cost Fixed Cost ** 100% of the company's maintenance and upkeep of Production Facility and applications & software is for main operation. *** Each overhead cost are allocated according to total sales of respective products. Note A- Utilities Ledger and Cost Driver Fixed Cost Fixed Cost Fixed Cost Machine hours 10,000 15,000 18,000 25,000 22,000 30,000 34,000 35,000 20.000 13,000 18,000 10,000 250,000 3| Page NNK Enterprise Accounting Records ending 31 December 2021. NNK Enterprise kept their financial records using cloud based accounting system, the following information was extracted. Based on Built of Material Dec 2020 summary. Each of Extendable Table 1 Basic Table top. 6 Table legs, and 2 Extended Table Top. Cost of respective material are $100.00, $49.00, and $79.00 per table. Furthermore, the summary also included direct labour cost per hour $30 per hour except assembler's labour cost is $50 per hour. The Direct Labour hours for each unit (Extendable Table) taken by respective process. The processes are as follows: Extendable Table processes are as follows: Processes Order confirmation Picking Packaging Direct Labour Ilour 10 minutes 15 minutes. 20 minutes Assembling Service processes are as follows: Processes Duration Order Assembling Packaging 10 minutes. 1 hour 20 minutes Production IIcad of Department also alerted CEO's office, that, the current facility maximum capacity for Extendable Table is at 1,100,000 unit. Furthermore, Services Department also identified the maximum capacity for Assembling Service is only for 50,000 Subscriber per year. Selling price was $2,000.00 and $200 per unit for Extendable Table and Assembling Service respectively. Note: In your responses, you are allowed to improvise or add to the case study details provided earlier. However, the case study should not be changed or compromised in any way. Any assumptions made, must be stated clearly. 4| Page QUESTIONS: As an external consultant, you have been asked by Management of company to prepare a written briefing paper for their next Management meeting. NNK Enterprise profitability improved over the years. Management identified potential of expansion opportunities through introduction of new product line. Drawing upon research and current practice, you are asked to cover the following issues: 1. BOD requested Management Costing Report for Financial Year End 2021 for the respective product and service. The report includes analyzing the Profitability for financial year ending 31 December 2021 using your chosen costing statements by product and services (complete and/or excerpts whichever is relevant) (9 marks) 2. Analyse the cost behavior of direct and supporting overhead for financial year ending 31 December 2021 (3 marks) 3. Appraise the New Investment using time invariant technique. (3 marks) 5| Page