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Snow White (SW) Pty Ltd. is a chocolate factory based in Victoria, Australia. SW produces white chocolate to supply to retail customers, restaurants and

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Snow White (SW) Pty Ltd. is a chocolate factory based in Victoria, Australia. SW produces white chocolate to supply to retail customers, restaurants and other confection manufacturers. In 2019, Snow White was acquired by a large Confection manufacturer Queen Victoria Ltd. (QV), and is structured as an investment centre. To produce white chocolate, SW purchases cocoa butter, milk powder directly from farmers and powdered sugar from wholesaler. The production process goes through: (1) melting cocoa butter, (2) mixing with milk powder and powder sugar, and (3) pouring into moulds, (4) cooling down, (5) cutting into Ikg block of white chocolate and (6) packing using aluminium paper to preserve the product. The production process from step 1 to step 5 are done by machine. The last step, packing, uses human labour. The factory has a machine which operates at maximum capacity of 1500 hours per year to produce 150,000 kg of white chocolate (50 weeks per year, 5 days per week, 6 hours per day). Working in the factory includes a supervisor who is also a machine operator, packing staff as demand, and a cleaning staff who works for 2 hours every day from 2pm-4pm. All finance, HR, selling and administration functions are provided by the shared services at QV headquarter. Standard costs for 1 unit of Ikg of white chocolate Direct material costs (DM) Cocoa butter (kg) Sugar (kg) Milk powder (kg) Standard DM cost per kg of chocolate (S/unit) Direct labour costs (DL) Direct labour - Packing (hour) Standard DL cost per kg of chocolate Machine operation Machine hours Production schedule 1 day (6 hours) 1 week (5 days) 1 year (50 weeks) Quantity per Ikg of white chocolate DL hour/unit Hour/batch of 1(1) kg Number of batches Price per unit of ingredient (S/kg) Labour rate per hour (S/hr) Hour/unit of 1 kg 0.01 Number of units Direct material costs (S/unit) 10.60 Labour costs (S/unit) 0.16 0.16 Machine hours

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