SECTION A: Compulsory Section (15 marks) This section is case study analysis consisting of three questions. ALL questions must be answered. NNK Enterprise 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 11th 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 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) Fixed Cost Variable Cost Total Cost $300,000 Cost Behavior $40,000 Fixed Cost $700,000 Semi Variable Cost Production cost (including water) ** $100,000 Variable Cost Maintenance & Upkeep of Applications and Software** $400,000 $100,000 Fixed Cost $200,000 Variable Cost $200,000 Fixed Cost $30,000 Fixed Cost $200,000 Fixed Cost $230,000 Fixed Cost $100,000 Fixed Cost Indirect Labour Indirect Material Other staff cost Marketing and promotion Research & Development General administrative expenses Training cost 0 $ 1 2 3 4 5 Cash flows 2,000,000 $ 300,000 $ 18,000 $ 500,000 $ 30,000 $ 800,000 $ 48,000 $ $ 1,600,000 $ 96,000 2,000,000 $ 120,000 The financial year end for NNK Enterprise is December 31 every year. The company' Operational flows is as follows: *75% of the company's computer & equipment, building, and utilities devoted to main operation activities, the remaining 25% used for selling and administrative function. ** 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 Inbound Process Basic Table top Table legs Order Picking Packaging Extended confirmation Table Top Smart Table Installation E-table top (Planning Year 2023) Table legs Extended Table Top Order confirmation Picking Packaging Order confirmation Assembling Packaging Outbound Month 6 bottles pack 500ml mineral water Jan Feb Mar Apr May Jun Jul Aug Customized Labeling Water Bottle Sep General Administrative, Finance, Human Resource Marketing & Promotion Research & Development Information Technology & Infrastructure Planning & Budget for financial year 2023 2|Page Oct Nov Dec Utilities Cost (5) 30,000 40,000 50,000 70,000 60,000 85,000 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 11 90,000 95,000 55,000 45,000 50,000 30,000 700,000 250,000 3| Page