Zelala Snack Shop, a student run convenience store is located in the academic building housing the Business Department of a small Malaysia College campus The store is run under the umbrella of a student organization Business club (BC) Zelala Snack Shop is headed by a Chief Executive Officer IN (CEO) who reports to the President of BC and involves Faculty Advisors in managerial meetings The shop sells a variety of iters including simple stationery, snacks, and instant coffee A competitor shop launched its operation in the Spring 2020 semester As a means to remain competitive, Zelala Snack Shop is considering to accept student debit cards called StudentCard and hope to triple customer traffic The number of daily transactions was estimated to increase from 15 to 55 The estimated dollar value of each transaction would remain at RM2 00 The average number of full business days per semester was estimated to be 60 days for analysis purposes The upcoming cost of accepting StudentCard is a combination of fixed and variable costs The card scanner reader cost RM25 00 per month to lease Each transaction using StudentCard would cost RM0 15 There was an 7 percent fee for each sale on StudentCard The RM25 00 per month charge on the reader would have to be paid even when the store was closed for winter and summer breaks in order to keep the account active Below are the contribution margin income statement for Zelala Snack Shop before accepting StudentCard As the Finance Manager of Zelala Snack Shop, you are called for a meeting with the President and Faculty Advisor to present on the following matters a Standard costs have been proposed to be adopted as part of performance evaluation efforts Critically discuss THREE (3) respective advantages and weaknesses of standard costs for Zelala Snack Shop 15 marks) b Inventories are required to be stated at the lower of cost and net realizable value (NRV) IAS 2 9 Critically assess the term inventories and the feasibility of applying IAS2 9 in cost determination for Zelala Snack Shop (15 marks) Adapted from Hall, L A Bandyopadhyay, J and McNamara S (2015) Coffee, costs, and competition a case exercise for managerial accotuting , Tive CASF Jourual, Vol 11 No 1, pp 95 101

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 19, 2024

Zelala Snack Shop, a student-run convenience store is located in the academic building housing the Business Department of a small Malaysia College campus. The store

Zelala Snack Shop, a student-run convenience store is located in the academic building housing the Business Department of a small Malaysia College campus. The store is run under the umbrella of a student organization-Business club (BC). Zelala Snack Shop is headed by a Chief Executive Officer IN (CEO) who reports to the President of BC and involves Faculty Advisors in managerial meetings. The shop sells a variety of iters including simple

stationery, snacks, and instant coffee.

A competitor shop launched its operation in the Spring 2020 semester. As a means to remain competitive, Zelala Snack Shop is considering to accept student debit cards called StudentCard and hope to triple customer traffic. The number of daily transactions was estimated to increase from 15 to 55. The estimated dollar value of each transaction would remain at RM2.00. The average number of full business days per semester was estimated to be 60 days for analysis purposes.

The upcoming cost of accepting StudentCard is a combination of fixed and variable costs.

The card scanner/reader cost RM25.00 per month to lease.
Each transaction using StudentCard would cost RM0.15.
There was an 7 percent fee for each sale on StudentCard.

The RM25.00 per month charge on the reader would have to be paid even when the store was closed for winter and summer breaks in order to keep the account active.

Below are the contribution margin income statement for Zelala Snack Shop before accepting StudentCard.

As the Finance Manager of Zelala Snack Shop, you are called for a meeting with the President and Faculty Advisor to present on the following matters.

a. Standard costs have been proposed to be adopted as part of performance evaluation efforts. Critically discuss THREE (3) respective advantages and weaknesses of standard costs for Zelala Snack Shop15 marks)

b. Inventories are required to be stated at the lower of cost and net realizable value (NRV). [IAS 2.9]".

Critically assess the term inventories and the feasibility of applying IAS2.9 in cost determination for Zelala Snack Shop (15 marks)

Adapted from Hall, L.A. Bandyopadhyay, J. and McNamara. S. (2015). "Coffee, costs, and competition: a case exercise for managerial accotuting", Tive CASF. Jourual, Vol. 11 No. 1, pp. 95-101