See information for the question in the images attached. REQUIREDCalculate the minimum purchase price WheyPro (Pty) Ltd would be willing to accept for the 1 500 kgs of plant-based protein.WHERE NECESSARY, ROUND TO TWO (2) DECIMAL PLACES.IF YOU FEEL AN AMOUNT IS IRRELEVANT, ENTER A ZERO (0). Cost (R)Pea Protein Enter the best of the three below options here for pea protein R Option 1 cost: Workings for option 1: Option 2 cost: Workings for option 2: Option 3 cost: Workings for option 3: Rice protein RHemp seed powder ROther ingredients RDirect labour R Total number of direct labour hours required Answer hrsRate per direct labour hour: R Supervisor salary REquipment R Depreciation R Variable overheads R Fixed overheads R Minimum price R WheyPro (Pty) Ltd is the largest private manufacturer of whey protein in the province of KwaZulu-Natal. Whey, which is the liquidresidue of cheese, casein and yoghurt production, is one of the biggest sources of food protein in the world. Since inception, WheyPro(Pty) Ltd has experienced exceptional growth in sales as nutrition markets have recognised whey protein as the most nutritionallydense food protein available. The CEO of WheyPro (Pty) Ltd, however, has noted a global trend in the last few years towards moresustainable, plant-based sources of protein and is looking for opportunities for move into this market.Recently, The Health Studio, a popular vegan restaurant located in Durban, has temporarily lost its supplier of its plant-based proteinblend which it uses in meat-alternative products and smoothies. The restaurant has approached WheyPro (Pty) Ltd to considersupplying 1 500 kgs of plant-based protein over the next month. The CEO is keen to take up this opportunity but is concerned that itwill not be financially feasible. As a result, he has asked you to analyse the financial feasibility of manufacturing the plant-basedprotein.You, together with the operations and nutrition managers, have compiled the following information regarding the special plant-proteinblend:IngredientsIn total, the operations manager has noted that 1 700 kgs of ingredients are required to manufacture the 1 500 kgs of plant-basedprotein. This is to account for weight loss of the raw ingredients, as well as other forms of losses, during the manufacturing process.In stock IngredientsRequiredOriginalpurchaseprice ofNotesCurrentpurchasepricestock itemsPea proteinRice proteinA350 kgs750 kgsR35 per kgR45 per kg450 kgs430 kgsR23 per kgR20 per kgHemp seed powderOther ingredients60 kgs253 kgsR51 per kgR55 per kgN/A???N/AR20 per kg1 700kgs totalThe pea protein is in regular use by WheyPro (Pty) Ltd. The company has also noted that it has 2 000 kgs of raw frozen peas instock from a failed experiment. The pea protein in these peas could be extracted from the peas with each kilogram of raw frozen peasconverting to 400 grams of pea protein. The company would also need to rent machinery for this conversion process. The total rentalof such machinery would amount to R12 000 for the one-month period (this rental cannot be apportioned for part of a month). Shouldthe raw frozen peas not be used for this opportunity, they will be sold to a pig farmer for use as feed at R4 per kilogram.A.B. The rice protein is also in continuous and regular use by WheyPro (Pty) Ltd. It is used in one of the most popular productsmanufactured by the company, SuperWhey Muscle Booster.C.The hemp seed powder in stock is a result of the same failed experiment as the peas mentioned in note A above. Hemp seedpowder is in high demand and, if not used in this opportunity, it will be packaged in 750g bags and sold for R20 per bag. Packaging isexpected to cost R4 per bag. WheyPro (Pty) Ltd will not purchase hemp seed powder in the future.B. LabourWheyPro (Pty) Ltd employs direct labour on an hourly basis. It is expected for the plant-based protein mix to be manufactured in 15batches of 100 kgs each. The first batch is expected to take 30 hours and a learning rate of 80% is expected to apply. Direct labour ispaid at a rate of R25 per hour.The operations manager also anticipates that a nutrition manager will need to supervise the manufacturing process. Unfortunately, nonutrition manager currently has spare time to work on the project. One of the nutrition managers has agree to work the required 20hours in overtime at a rate of R120 per overtime hour. This nutrition manager is normally paid a monthly salary of R15 000.EquipmentIn order to effectively extract the plant proteins, a modification to the precipitate separation machine will need to be purchased andinstalled for R15 000. This modification will be inseparable from the current machine and will have to remain attached even after thisspecial contract. WheyPro (Pty) Ltd depreciates equipment over its useful life to a nil residual value based on significant components.This modification is considered to be a significant component with a useful life of 5 years.OverheadsThe plant-based protein mix is expected to attract variable manufacturing overheads at a slightly higher rate than the current wheyprotein. The rate is expected to be R9.50 per kilogram.In addition, apportioned fixed manufacturing overheads from the manufacturing process will accrue at a rate of R10.15 per kilogram.

Relevant costing is the cost which is useful in the decision making process of whether to accept the…

Answered: RY, ROUND TO TWO (2) DECIMAL PLACES.…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

		Cost (R)
Pea Protein	Enter the best of the three below options here for pea protein	R
	Option 1 cost:
	Workings for option 1:
	Option 2 cost:
	Workings for option 2:
	Option 3 cost:
	Workings for option 3:
Rice protein		R
Hemp seed powder		R
Other ingredients		R
Direct labour		R
	Total number of direct labour hours required Answer hrs Rate per direct labour hour: R
Supervisor salary		R
Equipment		R
Depreciation		R
Variable overheads		R
Fixed overheads		R

Minimum price		R