SECTION A: Compulsory Section (15 marks) This section is case study analysis consisting of three questions. ALL questions must be answered. NNMC SDN BHD * N-MC Sdn Bhd a social enterprise company incorporated in Malaysia with the mission to advocate resilient infrastructure, promote inclusive and sustainable industrialize and foster innovation (SDG9). N-MC has two main two main outbounds which are building management application or software and LED lightings for building. NEW PRODUCT LINE The company was established since 2010, and will be celebrating its 10" anniversary next year. With that in mind, the board of directors proposed that N-MC to enhance LED lightings by adding non-explosive cover. The new improved LED lights will be known as EX-LED. In order to produce EX-LED, N-MC needs to invest on new molding machine which cost RM50,000 with required rate of return of 15%. 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 UI A W N PO 50,000 50,000 $ 70,000 $ 30,000 50,000 $ 60,000 $ 40,000 50,000 $ 50,000 $ 35,000 50,000 $ 40,000 25,000 50,000 $ 30,000 $ 20,000 The financial year end for N-MC is December 31 every year. The company' Operational flows is as follows: Inbound Process Outbound . Wire LED light Main Operations Activities . LED Strip . Metal Base . Cover . Wire Injection Assembling Packaging |Quality Check EX-LED light (new product line in . LED Strip Moulding 2021) (to be excluded in Master . Metal Base nor operation budget 20) . Cover . Resin 30 days trial Subscription Training Technical Building Management Payment support Applications/ Software Supporting General Administrative, Finance, Human Resource Activities Marketing & Promotion Research & Development Information Technology & InfrastructurePlanning & Budget for financial year 2020 For financial year 2020, Sales Department was assigned to achieve budgeted sales of 70,000 units and 30,000 online subscription respectively for EX-LED and Building Management Software. 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: Depreciation of Computer & Equipments for application* $300,000 Depreciation of Building* $40,000 Utilities* (Note A) $4,500,000 Maintenance & Upkeep of Production Facility* $100,000 Maintenance & Upkeep of Applications and Software* $200,000 Indirect Labour $504,000 Indirect Material $900,000 Other staff cost $2,000,000 Marketing and promotion $1,000,000 Research & Development $2,000,000 General administrative expenses $430,000 Training cost* $1,000,000 *75% of the company's computer & equipment, building, and utilities devoted to production activities, the remaining 25% used for selling and administrative function. ** 100% of the company's maintenance and upkeep of Production Facility and applications & software. Note A - Utilities Ledger and Cost Driver Utilities No. of machine hours Jan $214,500 72,000 Feb $517,500 110,000 Mar $420,500 100,000 Apr $345,000 95,000 May $288,000 81,000 Jun $631,000 118,000 Jul $424,350 101,000 Aug $434,000 105,000 Sep $276,000 78,000 Oct $325,000 93.000 Nov $299,000 81,000 Dec $325,150 87,000 $4,500.000 1,121,000NEMC Sdn Bbd Accounting Records ending 31 December 2019. NEMC kept their nancial records using cloud based accounting system, the following information was extracted. NEMC standard costing is based on the assumption of l batch is equal to 5 units. For example, each unit of LED requires 0.3 metre of Wire, hence] batch of LED requires 0.3 metres X 5 LED unit = 1.5metres for l batch. The same will apply for all direct material and direct labour. Based on Built of Material Dec 2019 summarv. Every unit of LED requires 0.3 metre of Wire, 10 strips of LED strip, 1 pc of Metal Base and 1 pc of Cover. Cost of respective material are $2.00 per metre, $1.00 per strip, $4.00 per pc, and $3.00 per pc. Furthermore, the summary also included hours taken by operators to Assemble, Pack, and Check for Quality which are 1 hour, 6 minutes, and 12 minutes respectively for every 5 units. Each operator hourly rate is $10. Another Service Report Summary consists of information on Building Management Applications! Software activities, which are trial 10 hours, subscription payment 12 minutes, training 50 hours, technical support 104 hours respectively for 10 subscription. Direct Labour Charge rate per hour for respective activities $20 for trial, $10 for subscription payment, $30 for training, and technical support for $50. Production Head of Department also alerted CED's office, that, the cturent facility maximum capacity for LED is at 100,000 unit. Furthermore, Services Department also identied the maximum capacity for Software Subscription is only for 50,000 pax per year. Selling price was $30.00 and $2,500 per unit for LED and Building Management Applicationi Software respectively. In addition, the following is the allocation of cost pools: LED Production: 30% Injection Molding {unit} 0% Assembling [unit] 20% Packaging {unit} 5% Quality Check {unit} 5% Building Management Apps 3" Software ?0% 30days trial [subscription] 5% Subscription Payment {subscription} 5% Training {subscription} 15% Technical Support [subscription] 45% 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. QUESTIONS: As an external consultant, you have been asked by Board of Directors of company to prepare a written briefing paper for their next Board meeting. N-MC Sdn Bhd profitability improved over the years. Board of Directors 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. Analyse Nasuha Sdn Bhd budgeted profitability for financial year ending 31 December 2020 using your chosen profitability budgeting by product and services (complete and/or excerpts whichever is relevant) (10 marks) 2. Analyse the cost behavior of direct overhead for financial year ending 31 December 2019. (2 marks) 3. Analyse appraisal on investment for production of new product line. Using time variant or time invariant approach (2 marks)