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The cost accountant in Nekosia Berhad has hired you as an intern to assist the work of the senior costing executive on an upcoming product test launch in April 2022. The management sees RIOS as a critical product line to increase Nekosia's market share in organic skincare. As an intern, you will be helping your senior executive to classify and draft the estimated product costs and period costs for decision making. The following information is available for your reference: 1. The procurement manager has identified two potential suppliers of the critical components in RIOS and obtained the following quotations: Supplier: LA ORGANICA Ltd. 1 2 3 4 5 Description Raw shea Butter (1 tub: 1kg) Rose extract (1 bottle: 1 litre) Argan oil (1 bottle: 50 ml) Salt scrub (1 bag: 100g) Cetyl alcohol (1 bottle: 500ml) TOTAL Quantity Unit Price TOTAL (RM) 1 RM100.00 100.00 5 5 3 2 RM200.00 RM150.00| RM50.00 RM100.00 1,000.00 750.00 150.00 200.00 RM2,200.00 Supplier: PICK-PACK PLC Description Biodegradable Bottles (1 box: 15 bottles) 2 Upcycled Labels (1 roll: 50 labels) TOTAL Quantity 100 10 Unit Price TOTAL (RM) RM15.00| 1,500.00 RM10.00| 100.00 RM1,600.00 The material sourced from La Organica will be used to make the 1,000 bottles of RIOS. Each bottle will use the packaging material sourced from Pick-Pack PLC. 2. 3. The operating manager drafted the estimated hours to be worked on the production of 1,000 bottles of RIOS: A quick check with the Human Resource Department has provided the following rates to be applied on the worked labour hours. Units Production Utilities Factory workers Supervisor Operating manager Marketing Costs Depreciation - Mixing Machine Factory workers Supervisor Operating manager The senior costing executive extracted the spreadsheet on the total expected indirect costs for RIOS: 200 400 RM280 RM310 RM5,000 RM5,000 Hours 6,400 640 160 RM1,000 RM1,000 Rate per Hour RM5.00 RM10.00 RM60.00 600 RM340 800 RM370 RM1,000 RM5,000 RM5,000 RM5,000 1,000 RM400 RM1,000 RM1,000 1. Required: a) Classify the costs of RIOS based on its cost behaviour and nature of expenditure using the template provided. Tick (✓) on cells where necessary. Materials from La Organica Ltd. Materials Pick-Pack PLC 3. Factory workers 4. Supervisor 5. Operating Manager 6. Production Utilities Marketing Costs 2. Costs 7. 8. Depreciation from Mixing Machine Cost Elements Product Costs Period Costs Cost Behaviour Fixed Costs Variable Costs Mixed Costs b) Determine the total costs equation for the production utilities. c) Calculate the unit product cost of RIOS for Nekosia Berhad. Nature of Expenditure Direct Indirect (6 marks) (3 marks) (4 marks) d) The cost accountant proposes to the management to sell RIOS at RM150 per bottle. If the sales manager is budgeting for 1,000 bottles per month, what would be the projected net profit for Nekosia Berhad for the last six months of 2022? (5 marks) e) Why is it essential for Nekosia Berhad to classify the costs based on the cost behaviour? (2 marks) The cost accountant in Nekosia Berhad has hired you as an intern to assist the work of the senior costing executive on an upcoming product test launch in April 2022. The management sees RIOS as a critical product line to increase Nekosia's market share in organic skincare. As an intern, you will be helping your senior executive to classify and draft the estimated product costs and period costs for decision making. The following information is available for your reference: 1. The procurement manager has identified two potential suppliers of the critical components in RIOS and obtained the following quotations: Supplier: LA ORGANICA Ltd. 1 2 3 4 5 Description Raw shea Butter (1 tub: 1kg) Rose extract (1 bottle: 1 litre) Argan oil (1 bottle: 50 ml) Salt scrub (1 bag: 100g) Cetyl alcohol (1 bottle: 500ml) TOTAL Quantity Unit Price TOTAL (RM) 1 RM100.00 100.00 5 5 3 2 RM200.00 RM150.00| RM50.00 RM100.00 1,000.00 750.00 150.00 200.00 RM2,200.00 Supplier: PICK-PACK PLC Description Biodegradable Bottles (1 box: 15 bottles) 2 Upcycled Labels (1 roll: 50 labels) TOTAL Quantity 100 10 Unit Price TOTAL (RM) RM15.00| 1,500.00 RM10.00| 100.00 RM1,600.00 The material sourced from La Organica will be used to make the 1,000 bottles of RIOS. Each bottle will use the packaging material sourced from Pick-Pack PLC. 2. 3. The operating manager drafted the estimated hours to be worked on the production of 1,000 bottles of RIOS: A quick check with the Human Resource Department has provided the following rates to be applied on the worked labour hours. Units Production Utilities Factory workers Supervisor Operating manager Marketing Costs Depreciation - Mixing Machine Factory workers Supervisor Operating manager The senior costing executive extracted the spreadsheet on the total expected indirect costs for RIOS: 200 400 RM280 RM310 RM5,000 RM5,000 Hours 6,400 640 160 RM1,000 RM1,000 Rate per Hour RM5.00 RM10.00 RM60.00 600 RM340 800 RM370 RM1,000 RM5,000 RM5,000 RM5,000 1,000 RM400 RM1,000 RM1,000 1. Required: a) Classify the costs of RIOS based on its cost behaviour and nature of expenditure using the template provided. Tick (✓) on cells where necessary. Materials from La Organica Ltd. Materials Pick-Pack PLC 3. Factory workers 4. Supervisor 5. Operating Manager 6. Production Utilities Marketing Costs 2. Costs 7. 8. Depreciation from Mixing Machine Cost Elements Product Costs Period Costs Cost Behaviour Fixed Costs Variable Costs Mixed Costs b) Determine the total costs equation for the production utilities. c) Calculate the unit product cost of RIOS for Nekosia Berhad. Nature of Expenditure Direct Indirect (6 marks) (3 marks) (4 marks) d) The cost accountant proposes to the management to sell RIOS at RM150 per bottle. If the sales manager is budgeting for 1,000 bottles per month, what would be the projected net profit for Nekosia Berhad for the last six months of 2022? (5 marks) e) Why is it essential for Nekosia Berhad to classify the costs based on the cost behaviour? (2 marks)
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Classification of cost of RIOS for cost accountant in Nekosia Berhad For 1000 bottles of RIOS to be launched from April 2022 a Cost Cost elements Cost ... View the full answer
Related Book For
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
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