Transcribed image text : Question B2 Your Walls (YW) manufactures wallpaper and associated products for home decoration. The company is considering the launch of a new innovative product, the QuickRoll. The QuickRoll is a system that allows for wallpaper paste (glue) to be applied directly onto a wall, and the wallpaper to be rolled immediately into place. This allows an amateur decorator to complete an entire room, to a professional looking standard, in just a few hours. The unit operates with a rechargeable battery pack and requires the use of the specially designed YW wallpaper paste. Simple instructions are provided with the QuickRoll and, if followed closely and used with the appropriate paste, it will result in a perfectly smooth and even finish. YW intends that production of the QuickRoll will start on 1 January 2023. Production will continue for an initial period of 12 months, at which time its success in the market will be reviewed. Prior to the final decision being taken to launch this product the board of directors of YW would like to obtain some information regarding its profitability. The product development manager has provided the following estimates in relation to the production and sale of the QuickRoll: . Sales predictions: At an intended selling price of 68 per QuickRoll, 10,000 QuickRolls will be produced and sold in the first 12 months. . Material: Each QuickRoll will require 2kg of paper and 1kg of plastic. Paper is used regularly by YW, in many different products, whereas plastic can only be used in the production of the QuickRoll. YW currently has in its warehouse 20,000kg of paper and 12,000kg of plastic. If not used in the production of the QuickRoll, the plastic must be sold. All of the paper was bought at a price of 20 per kg, all of the plastic was bought at a price of 16 per kg. Current selling prices of the existing material stocks are; paper 15 per kg and plastic 6 per kg. Current buying prices of the latest standard of the material are; paper 12 per kg and plastic 22 per kg. . Labour: Each QuickRoll requires 45 minutes of skilled labour, currently paid at 16 per hour, and 90 minutes of assembly labour, currently paid at 10 per hour. YW expects to have 25,000 hours of assembly labour unutilised in 2023, and has no plans to reduce its workforce. Skilled labour, however, is predicted to be in short supply for the indefinite future. Skilled labour could be found for the production of the QuickRoll by reducing the production of another product. This other product currently yields a contribution of 10 per skilled labour hour. . Overheads: The current overhead cost per QuickRoll is: Allocation of premises rental cost 16 Depreciation of machinery 2 Variable overheads 10 Total 28 ? Machinery: The specialist machine used to produce the QuickRoll is already owned but is not used by the business at present. If it was not used to produce the QuickRoll it would be sold at the start of 2023 for 150,000. The selling price at the end of 2023 will be 110,000. Alternatively, a machine could be hired for 2,000 per month. (a) Use relevant costing techniques to calculate the profit or loss that would be [16] achieved for the QuickRoll system in the 12 months commencing 1 January 2023. Your calculations should be supported with clear explanations of the reason why a particular figure is included, or excluded, and of any assumptions that you make. Additionally, state whether or not the product should be launched (b) Describe TWO non-financial factors that YW may wish to take into account [4] when deciding to launch this product. Your description should include details of the potential impact of the factors on the business. Transcribed image text : Question B2 Your Walls (YW) manufactures wallpaper and associated products for home decoration. The company is considering the launch of a new innovative product, the QuickRoll. The QuickRoll is a system that allows for wallpaper paste (glue) to be applied directly onto a wall, and the wallpaper to be rolled immediately into place. This allows an amateur decorator to complete an entire room, to a professional looking standard, in just a few hours. The unit operates with a rechargeable battery pack and requires the use of the specially designed YW wallpaper paste. Simple instructions are provided with the QuickRoll and, if followed closely and used with the appropriate paste, it will result in a perfectly smooth and even finish. YW intends that production of the QuickRoll will start on 1 January 2023. Production will continue for an initial period of 12 months, at which time its success in the market will be reviewed. Prior to the final decision being taken to launch this product the board of directors of YW would like to obtain some information regarding its profitability. The product development manager has provided the following estimates in relation to the production and sale of the QuickRoll: . Sales predictions: At an intended selling price of 68 per QuickRoll, 10,000 QuickRolls will be produced and sold in the first 12 months. . Material: Each QuickRoll will require 2kg of paper and 1kg of plastic. Paper is used regularly by YW, in many different products, whereas plastic can only be used in the production of the QuickRoll. YW currently has in its warehouse 20,000kg of paper and 12,000kg of plastic. If not used in the production of the QuickRoll, the plastic must be sold. All of the paper was bought at a price of 20 per kg, all of the plastic was bought at a price of 16 per kg. Current selling prices of the existing material stocks are; paper 15 per kg and plastic 6 per kg. Current buying prices of the latest standard of the material are; paper 12 per kg and plastic 22 per kg. . Labour: Each QuickRoll requires 45 minutes of skilled labour, currently paid at 16 per hour, and 90 minutes of assembly labour, currently paid at 10 per hour. YW expects to have 25,000 hours of assembly labour unutilised in 2023, and has no plans to reduce its workforce. Skilled labour, however, is predicted to be in short supply for the indefinite future. Skilled labour could be found for the production of the QuickRoll by reducing the production of another product. This other product currently yields a contribution of 10 per skilled labour hour. . Overheads: The current overhead cost per QuickRoll is: Allocation of premises rental cost 16 Depreciation of machinery 2 Variable overheads 10 Total 28 ? Machinery: The specialist machine used to produce the QuickRoll is already owned but is not used by the business at present. If it was not used to produce the QuickRoll it would be sold at the start of 2023 for 150,000. The selling price at the end of 2023 will be 110,000. Alternatively, a machine could be hired for 2,000 per month. (a) Use relevant costing techniques to calculate the profit or loss that would be [16] achieved for the QuickRoll system in the 12 months commencing 1 January 2023. Your calculations should be supported with clear explanations of the reason why a particular figure is included, or excluded, and of any assumptions that you make. Additionally, state whether or not the product should be launched (b) Describe TWO non-financial factors that YW may wish to take into account [4] when deciding to launch this product. Your description should include details of the potential impact of the factors on the business