DIPLOMA IN

BA117

ACC116
INTRODUCTION TO COST ACCOUNTING

COSTING METHOD
HE AND SHE
COFFEE

GROUP: BA1172E/GROUP 5

Prepared by:
Name Matric no. No of attendance
to team meeting
(to be signed and
verified by team
leader)
MUHAMMAD FAZLEY BIN MOHAMAD SIN 2023860246 3/3
MUHAMMAD HARITH IZZAT BIN ZULKEPLI 2023638828 3/3
MUHAMMAD ATIF ZAIM BIN NAZRI 2023837734 3/3
MUHAMMAD HAIQAL BIN HISAMUDIN 2023842682 3/3
DANISH HAQIM BIN EMRAN 2023845302 3/3

Prepared for:
MADAM FAIRUZ BINTI RAMLI
 TABLE OF CONTENT

No. CONTENT PAGES

1. BUSINESS OVERVIEW 3

2. ASSIGNMENT PROTOCOL 4

3. PRODUCT COSTING 5-7

4. PICTURE OF THE PRODUCT 8

5. REFLECTION ON INDIVIDUALS 9-10

SUGGESTION FOR THE BUSINESS ON HOW

6. THEY CAN FURTHER IMPROVE IN MANAGING 11
THE COST

7. CONCLUSION 12

8. REFERENCE 13

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BUSINESS OVERVIEW
For our assignment, we selected He n She Coffee. We chose this shop because
product costing method focus on capturing and allocating the costs of producing
and selling various coffee drinks and other items they offer. By collecting
information on this shop, we can determine the exact cost for each coffee they
sell. Here are some background details we've observed about this coffee shop :

Owner’s Name Zulkiflee bin Yusof

Company’s Name Zulkiflee Yusof Trading
Business Name He & She Coffee
UITM Pasir Gudang, Kafeteria Bangunan
Location
Kejuruteraan Kimia
Age 51
Contact Number 013-330 2596
Date of Business Started June 2021
Types of Business Sdn Bhd
Tagline “Precious moment in a cup”

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ASSIGMENT PROTOCOL

Team meeting
and business
selection
(18/06/2024)

Physical interview
with shop owner
(24/06/2024)

Analysis of interview
output

(26/06/2024)

Draft assignment
report
(27/06/2024)

Consultation with
madam

(02/06/2024)

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Explanation of Product Costing Methodologies Employed

For a he&she coffee shop, product costing methodologies essentially focus on

ways of capturing and allocating costs incurred in producing and selling various
cups of coffee or other items it sells. The following are normally the
methodologies used in the operation of coffee shops. Firstly, he&she is using job
order costing used when the coffee shop offers customized orders or special
items that are made to order. Costs such as the cost of matcha powder (direct
materials), wages of baristas (direct labour), and overhead costs (rent, utilities)
are tracked and allocated to specific customer orders or batches of specialty
drinks. Other than that, he&she coffee shop is using process costing, this
method suitable for standard menu items that are produced consistently. Costs
are averaged over the number of units (cups of coffee) produced during a
specific period. This includes direct costs like coffee beans and milk, labour costs
of baristas, and overhead costs of maintaining the coffee- making area.

Identification and breakdown of direct materials costs

Direct materials costs in a coffee shop are essential for accurate cost
management and profitability. These costs, matcha powder, vanilla powder, fresh
milk, and other ingredients directly used in beverage preparation, are identified
through meticulous tracking and recording of usage via inventory systems or
requisition forms. Calculating direct materials costs involves multiplying the
quantity used per unit by the unit cost of each material, ensuring precise
allocation to each product. This process not only supports accurate pricing but
also enables effective cost control and decision-making regarding sourcing,
inventory management, and overall business profitability, crucial in maintaining
competitiveness and sustainable operations in the coffee industry.

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PRODUCT COSTING

HE AND SHE COFFEE

JOB COST CARD
ICED MATCHA BLENDED

RM RM
DIRECT COST:
DIRECT MATERIAL:
matcha powder (22.5/10units) 2.25
vanilla powder (10.5/10units 1.05
water (0.2/10) 0.02

3.32
DIRECT LABOUR
Skilled workers (1700/26/12.5) 5.23
Skilled workers (1700/26/12.5) 5.23 10.46
DIRECT EXPENSES
Petty cash (500/30/10) 1.67 1.67
PRIME COST 15.45
MANUFACTURING/PRODUCTION
OVERHEAD
-INDIRECT MATERIALS
cup (750 cups x 0.35)
lid (750 cups x 0.13) 0.35
straw (750 cups x 0.10) 0.13
0.10 0.58
-INDIRECT LABOUR
Machinery maintenance
5 5
(150/30)
-INDIRECT EXPENSES
Coway villaem II 4
4
(RM7200/12/5/30)
TOTAL
MANUFACTURING/PRODUCTION
9.58
COSTS
NON-
MANUFACTURING/PRODUCTION
OVERHEAD
Electricity bills(1100/30/12.5) 2.93
Water bills(200/30/12.5) 0.53
Rental(1500/30/10) 5
TOTAL NON-MANUFACTURING
/PRODUCTION OVERHEAD 8.46
TOTAL COSTS (10049.17/750) 13.39
PROFIT (54%/10049.17//750) 7.24
SELLING PRICE (TC + P) 20.64

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 HE AND SHE
COFFEE JOB COST
CARD HOT
CHOCOLATE

RM RM
DIRECT COST:
DIRECT MATERIAL
Fresh milk (1.50x450 cups) 675
Water (0.02x450) 9
Hot cup (0.14x450 cups) 63
Lid (0.13x450 cups) 58.50
Chocolate powder (1.50x450 675 1359
cups)
DIRECT LABOUR
65.40x26 1700 3400
65.40x26 1700
DIRECT EXPENSES
petty cash (500/30) 16.67 16.67
PRIME COST 4775.67
MANUFACTURING/PRODUCTION
OVERHEAD
-INDIRECT MATERIALS
Hot cup (0.14x450 cups) 63
Lid (0.13x450 cups) 58.50 121.50
-INDIRECT LABOUR
Machinery maintenance 150 150
-INDIRECT EXPENSES
Coway villaem 2 (7200/12/5/30) 4 4

TOTAL MANUFACTURING
/PRODUCTION COSTS 391.50
NON-MANUFACTURING
/PRODUCTION
OVERHEAD
Electricity bills 1100 1100
water bills 200 200
rental 1500 1500
TOTAL
NON-MANUFACTURING
/PRODUCTION OVERHEAD 2800 2800
TOTAL COSTS (7972.67/450) 17.17
PROFIT (53%/7972.67/450) 9.39
SELLING PRICE 25.

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PICTURE OF THE PRODUCT

ICE MATCHA BLENDED

HOT CHOCOLATE

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REFLECTION ON INDIVIDUALS

1. MUHAMMAD FAZLEY BIN MOHAMAD SIN (2023860246)

For me, this product cost computation project was a hands-on experience.
I learned how to track production costs and distinguish between direct and
indirect charges by using the job cost card method. Although I was initially
intimidated by the idea of job costing, working on the assignment helped me
understand its importance in managerial accounting. It’s a useful tool that aids
organizations in making well-informed decisions; it’s not just about the statistics.
This task helped me connect theory to practical applications, making the subject
matter more tangible and relevant. Working with my team made the experience
enjoyable and highlighted the dynamic nature of accounting. It provided realistic
experience in making financial decisions by skilfully fusing theory and real-world
application.

2. MUHAMMAD HARITH IZZAT BIN ZULKEPLI (2023638828)

From my point of view, after completing this assignment, this topic has
truly opened my mind to something new. This knowledge is essential for
everyone involved in business, particularly business owners, as it is crucial for
managing company costs. Understanding the cost of production for each
product, including ingredients and labour, is vital for achieving company
objectives. Through this topic, I learned to identify which parts of the cost we
need to prioritize and where we can reduce expenses. This skill is invaluable for
making strategic decisions that optimize resources and enhance profitability.
Overall, this experience has broadened my perspective on cost management and
its importance in business success.

3. MUHAMMAD ATIF ZAIM BIN NAZRI (2023837734)

Through this assignment, I gained valuable insights into precision and
detail when calculating quantities, which are essential skills in any analytical
role. The experience of interviewing the cafe owner was particularly impactful as
it pushed me beyond my comfort zone, forcing me to approach problems with
fresh perspectives and sharpening my critical thinking abilities. This challenge
not only broadened my understanding but also instilled confidence in tackling
unfamiliar situations. Furthermore, our group dynamic during this assignment
was crucial. Effective teamwork and open communication were key factors that
enabled us to overcome challenges and deliver a successful outcome. Each team
member brought unique strengths to the table, and our collaborative effort was
integral to achieving our goals within the project’s timeline.

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4. MUHAMMAD HAIQAL BIN HISAMUDIN (2023842682)

In this assignment, I gained invaluable skills in calculating quantities with

meticulous attention to detail. This proficiency is crucial in ensuring accuracy and
efficiency in any analytical or operational task. The interview with the cafe owner
was a pivotal moment that pushed me beyond my comfort zone. It required me
to apply my critical thinking skills to gather insightful information and explore
innovative solutions. Moreover, the collaborative aspect of this assignment was
equally enlightening. Working closely with my team, we fostered a supportive
environment built on trust and effective communication. This cohesion was
indispensable as we navigated challenges together and pooled our diverse
strengths to achieve our objectives. Our collective dedication and hard work were
essential in meeting project deadlines and delivering results that exceeded
expectations.

5. DANISH HAQIM BIN EMRAN (2023845302)

This assignment has been a significant learning experience in several

ways. Firstly, it enhanced my ability to calculate precise quantities, which is
crucial for accuracy in any business context. Stepping out of my comfort zone to
interview the cafe owner was challenging, yet it was instrumental in developing
my critical thinking and problem-solving skills. This experience taught me the
importance of embracing new challenges to foster personal and professional
growth. Additionally, the assignment emphasized the value of teamwork and
communication. Collaborating with my team was essential, and our ability to
communicate effectively and work hard together was key to our success. The
project also honed my managerial accounting and decision-making skills. By
computing product costs, observing production expenses, and using the task cost
card method, I gained a deeper understanding of the distinctions between direct
and indirect charges.

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SUGGESTION FOR THE BUSINESS ON HOW THEY CAN FURTHER IMPROVE IN
MANAGING THE COST

Firstly, a basic but Important step towards managing cost effectively is Detailed
Analysis & Tracking of Cost - Most enterprise do track costs. For businesses, this
is an area where there must be strong systems to keep all departments and
processes on the expenditure side frequently monitored or examined. This type
of analysis helps you better identify areas where costs may be cut or optimized
(think eliminating frivolous expenditures and renegotiating supplier contracts)

Proper budgeting and forecasting are of paramount importance to part our

financial resources in line with business objectives. It enables businesses to
create sensible budgets and then track their expenses, so that can better
manage existing economic conditions. By making this a priority, you not only
drive financial sustainability but also allow the ability to make strategic business
decisions off live operational data instead.

The management of vendors is another crucial part in the escalation of costs.

Enterprises need to proactively negotiate as well as review vendor contracts on
a regular basis in order to achieve favourable terms and be cost-effective.
Strengthen supplier relationships and explore other sourcing strategies to
reduce the cost impact.

Effective cost management is indispensable for any organization to grow

sustainably and competitively. Proper steps to be implemented toward such
goals include comprehensive cost analysis, budgeting and forecasting, vendor
management, process optimization, technological utilization, employee trainings,
energy efficiency, benchmarking, and financial monitoring. The need for
businesses to adopt a culture of constant improvement and innovation in related
cost management will contribute significantly toward promotion of operational
efficiency and long-term business success amid times of economic challenge.

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CONCLUSION
In conclusion, a job cost card is an essential tool for managing and tracking costs
at He & She Coffee. It provides a clear and concise overview of expenses for
specific tasks, helping the team maintain budgetary discipline and ensuring that
resources are used effectively. By spotting discrepancies early, they can address
issues promptly, keeping projects on track financially and avoiding potential cost
overruns.

The benefits of using a job cost card include improved accuracy in cost allocation
and greater transparency in financial reporting. This detailed tracking allows for
better analysis of profitability and supports informed decision-making. With
precise cost data, the shop can optimize resource use and engage in effective
planning, leading to more efficient operations and improved financial
performance. Additionally, the ability to monitor costs closely helps the business
identify areas for potential savings and improvements.

Overall, job cost cards foster a culture of accountability and precision at He &
She Coffee, contributing to systematic financial management. By maintaining a
detailed record of expenses, the company can ensure that all financial aspects
are thoroughly monitored and controlled. This tool not only strengthens financial
integrity but also builds credibility with stakeholders, supporting the long-term
success of the business. As a result, He & She Coffee can maintain its
competitive edge in the market, ensuring that it remains a reliable and
financially establish.

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REFERENCE

1. ACC116 textbook

2. He&she coffee social media

(https://www.instagram.com/heandshecoffee_hq?
igsh=MTh3YmszaDVlbHlhbA==)

3. Website:
(https://www.studocu.com/my/document/universiti-teknologi-mara/
introduction-to-
cost-accounting/acc116-week-14-group-assignment/60103394)

4. Interview with he&she coffee’s employeer

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