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 1 1" 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 0 $ 2,000,000 300,000 $ 18,000 500,000 30,000 UI AWN P 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: Inbound Process Outbound . Basic Table top 6 bottles pack 500ml mineral . Table legs Orde water Extended confirmation Picking Packaging Table Top . Smart Table Installation E-table Main Operations Activities top (Planning Year 2023) Order Table legs confirmation Picking Packaging Extended Table Top Order Assembling Packaging Customized Labeling Water Bottle confirmation General Administrative, Finance, Human Resource Marketing & Promotion Supporting Activities Research & Development Information Technology & Infrastructure Planning & Budget for financial year 2023 2| PageFor nancial 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 identied as follows: Overhead Total Cost Cost Behavior" * * Depreciation of Computer & Equipments* $3 00,000 Fixed COSt Depreciation of Buildirlg* $40,000 Fixed Cost Utilities* (Note A) $700,000 Semi Variable Cost Production cost (including water) ** $100,000 Variable Cost Maintenance & Upkeep of Applications and Software** $400,000 Variable COSt Indirect Labour $100,000 Fixed Cost Indirect Material $200,000 Variable Cost Other staff cost $200,000 Fixed Cost Marketing and promotion $30,000 Fixed Cost Research & Development $200,000 Fixed Cost General administrative expenses $230,000 Fixed C051 Training cost* $100,000 Fixed Cost *75% of the company's computer & equipment, building, and utilities devoted to main operation activities, the remaining 25% used for selling and administrative function. ** 100% of the company's maintenance and upkeep of Production Facility and applications & software is for main operation. *** Each overhead cost are allocated according to total sales of respective products. Note A Utilities Ledger and Cost Driver Month Utilities Cost ($) Machine hours Jan 30,000 10,000 Feb 40,000 15,000 Mar 50,000 18,000 Apr 70,000 25,000 May 60,000 22,000 Jun 85,000 30,000 Jul 90,000 34,000 Aug 95,000 35,000 Sep 55,000 20,000 Oct 45,000 13,000 Nov 50,000 18,000 Dec 30,000 10,000 700,000 250,000 3|Page NNK Enterprise Accounting Records ending 31 December 2021. NNK Enterprise kept their nancial 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 Direct Labour Hour Order confirmation 10 minutes Picking 15 minutes Packaging 20 minutes Assembling Service processes are as follows: Processes Duration Order 10 minutes Production Head of Department also alerted CEO's ofce, 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)