Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Cost system of Al-Nahdain Mineral Water Company Ltd
Instructor: Dr. Mohammed Awlaqi
Done by:
Omar Al-Sunaidar 61930008
Zakaria Alkindi 61920011
Ala’a Mansoor 61920091
Nosayba Osaiwran 61920049
Elza Alwadie 61930043
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Table of Contents
Contents
Introduction........................................................................................... 1
Objectives: ............................................................................................. 2
Organizational Structure...................................................................... 3
Costs Classification ............................................................................... 4
Company Activities ............................................................................... 5
Costs centers .......................................................................................... 5
Revenue centers.................................................................................... 6
Manufacturing process ......................................................................... 6
Recommendation ................................................................................ 12
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Introduction
Al-Nahdain Mineral Water Company Ltd. is one of Al-Hathrah's companies for Industrial and
Trading Group. It is considered to be one of the first groups established in the Republic of
Yemen immediately after the revolution and the Group's activity has started in the field of trade
and industry in Yemen.
It Works in producing the finest types of mineral water and is considered the first product in
terms of quality and sweetness on the whole of Yemen. Where it is subjected to technical
supervision in both production and quality of a French international company that is operating in
the same field with high specifications and applying the highest standards which carry the
distinctive brand (Haddah).
Thanks to adherence to international and local standards in terms of quality, specifications and
standards, Al-Nahdain Mineral Water Company Ltd. has a distinguished position in the
economic circles.
There is also a distinguished cooperation between us and other international companies in the
fields or raw materials purchasing as well as the procurement of spare and maintenance parts
required for our production lines'machines.
Since its establishment, Al-Nahdain Mineral Water Company has been striving to provide the
highest quality products to its customers. The company continues to grow and develop by
seeking new attractive investment opportunities that expand the business base in the economies
of different countries and create added value that casts a positive light on individuals and the
community.
We believe that water is one of the essentials of life, which must be a source of healthy food, it
can be a cause of contamination of entire human societies if one of the safety standards is
violated when produced. Therefore, we are subject to technical supervision in the production and
quality of a French international company and strive to renew and follow the highest standards of
safety through periodic maintenance and continuous inspection
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Al-Nahdain Mineral Water Company Ltd, which works in producing the finest mineral
water, is looking to become one of the leading international companies by cooperating
with other international companies in the field of raw materials, as well as by providing
spare parts and special maintenance of the factory of Al-Nahdain Mineral Water
Company Ltd.
Our company derives its success from the historical heritage of the Yemeni family. We
provide our products to all Yemeni society members through the creation of a variety of
ways to provide our products permanently to consumers, and we commend our staff as
one of the pillars of our continuous success.
We remain committed to maintaining the highest standards of safety in our products to
preserve the safety of our community members and other communities.
Objectives:
Access our products to international standards in quality and safety.
Providing our products to all members of society with compliance with safety standards.
Export our products to other countries, and honor our country and our company with the
quality of our products.
Recruit and develop the best staff and retain them.
Maintaining global safety standards by adhering to the integrity and honesty required to
produce the most important essentials of life.
Message:
Educate the community about the importance of research and compliance with safety
standards for our product and water products in general, by monitoring the sound
components attached to all our products
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Organizational Structure
Chairman of
Board of
Directors
Deputy
Chairman of
the Board
CEO
Chief Financial Production Maintenance
Officer Manager Manager
Sales &
Accounting Purchasing Laboratory Mechanical Electronical Electrical
Marketing Quality Dept.
Dept. Dept. Dept. Dept. Dept Dept.
Dept.
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Costs Classification
Costs element Costs
classification
Administrative Chairman of Board of Directors Period cost
and general Deputy Chairman of the Board Period cost
CEO Period cost
expenses
Chief Financial Officer Period cost
Accounting Dept. Period cost
Sales & Marketing Dept. Period cost
Purchasing Administrative needs Period cost
Cost of Product Purchasing Raw Material Product cost
Production Manager Product cost
Quality Dept. Product cost
Laboratory Dept. Product cost
Maintenance Manager Product cost
Mechanical Dept. Product cost
Electronical Dept. Product cost
Electrical Dept. Product cost
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Company Activities
The company has one activity which is the production of healthy mineral water under
international standards and under the supervision and technical skill of ICE-FRANCE , and they
had two productions line one for the small size and one for the big size.
They use the process system because it’s the mass production.
They use the actual cost of manufacturing overhead because they close their accounts at the end
of each month so they get the actual cost ,so that they are not using cost system like the
traditional cost or the ABC costing when they calculate the manufacturing overhead they just
calculate the cost of the indirect cost at the end of each month.
Costs centers
Al-Nahdain Mineral Water Company Ltd has 4 cost centers they will be mentioned below:
Cost center no.5
Direct production costs: The person responsible for all direct costs of the product with
monthly reports if it is in decline or rise compared to the previous month and the only
responsible person for this center.
Cost center no.6
Production Services costs: There are services at the production so this cost center is
responsible for all costs that served production and the responsible person of this center
should submit a report monthly if there is any rise or decrease compared to the previous
months.
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Cost center no.7
Sales and marketing costs: Is the person responsible for all the costs of selling and
marketing and he must submit monthly reports compared to previous months, for
example, marketing costs vary from month to month at the beginning of the year there are
many printing cost after that the last months just a normal ads .
Cost center no.8
Administrative services costs: Is the cost center responsible for all the costs of
Administrative and to calculates the total cost , and to compare each month with the
previous months and if there is any rise or decrease there should be a report clear the
reasons of the change.
Revenue centers
Al-Nahdain Mineral Water Company Ltd has more than 22 points of revenue center in all
governorates of the Republic of Yemen and the most important one is Sana'a Center and these
revenue centers are through agents in each governorates .
Manufacturing process
In the process of manufacturing there are many stages and each stage includes direct material ,
direct labor and manufacture overhead in Al-Nahdain Mineral Water Company Ltd there are
five stages of manufacturing it will be mentioned, This will be for one line and the second line is
the same :
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
First stage : Water extraction, treatment and purification
Direct material Direct labor Manufacturing
• Water purification 2 labors overhead
chemicals • Diesel
• One labor to switch
on/off the pump • Maintenance of
• One labor to swith pump and Filtering
on/off the Purification devices
device & to add the • Depreciation
chemicals to the
device and filters
In first stage of Manufacturing they start to extract the water from the well to big tanks then the
water go through pipes to treatment and purification they add the purification chemicals to the
devices and the water goes through the devices and then save the water in big tanks for the third
stage and in each stage they lose Diesel for the generators and the lose maintenance for each
machine and the calculate the depreciation and in this stage they need 2 labor they calculate their
wages and then divide by the output.
Approximately
Item Cost Per Liter
Direct Material 6.66 Y.R
Direct Labor 5.33 Y.R
Manufacturing overhead 9.33 Y.R
Total 21.32 Y.R
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Second stage: Injection and blowing process
Direct labor
2 labors •Diesel
•Ampoules •Maintenance of the
•One labor take the machine
ampoule pallet from •Depreciation
the store to the
machine
Direct material •One labor to switch Manufacturing
on/of the machine overhead
In this stage they Start by taking the materials which they are the Ampoules which they are the
most expansive material from the store they take one pallet which contain a lot of Ampoule to
the machine and the machine start to inject and blowing the Ampoules to bottles then they are
ready to the next stage and in each stage they lose Diesel for the generators and the lose
maintenance for each machine and the calculate the depreciation and in this stage they need 2
labor they calculate their wages and then divide by the output.
Approximately
Item Cost Per Bottle
Direct Material 40 Y.R
Direct Labor 4 Y.R
Manufacturing overhead 5 Y.R
Total 49 Y.R
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Third stage : Filling stage
Direct material Direct labor Manufacturing
overhead
•water •One labor to switch •Diesel
•Bottle caps on/off the machine •Maintenance of the
•One labor to add the machine
bottle caps to the •Depreciation
machine
•One labor to monitor
the water line
In this stage the bottles are ready from the previous the water come from the tanks through pipes
to the machine and the machine fill the bottles and the labor add the caps of the bottles to the
machine and the machine close the bottles by the caps then they are ready to the next stage and
in each stage they lose Diesel for the generators and the lose maintenance for each machine and
the calculate the depreciation and in this stage they need 3 labor they calculate their wages and
then divide by the output.
Approximately
Item Cost Per Bottle
Direct Material 4 Y.R
Direct Labor 6 Y.R
Manufacturing overhead 3 Y.R
Total 13 Y.R
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Fourth stage : Label stage
Direct material
Direct labor
Labels
Manufacturing overhead
One labor to add the
labels to the machine
Diesel
One labor to switch on/off
Maintenance of the
the machine
machine
One labor to monitor the
Depreciation
line
In this stage the bottle is ready in the production line from the previous stage so the labor just
add the labels to the machine and switch on the machine and the machine start label each bottle
then they are ready to the next stage and in each stage they lose Diesel for the generators and the
lose maintenance for each machine and the calculate the depreciation and in this stage they need
3 labor they calculate their wages and then divide by the output.
Approximately
Item Cost Per Bottle
Direct Material 2 Y.R
Direct Labor 6 Y.R
Manufacturing overhead 2 Y.R
Total 10 Y.R
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Fifth stage: Packaging Stage
Diesel
Plastic One labor One laber
to add the to switch Maintenance of
material to on /off the the machine
machine machine Depreciation
Carton
Direct material Direct labor Manufacturing overhead
In this stage the labor add the plastic which cover each 20 bottle from upper together and add the
carton which cover them from down to the machine and the machine start packaging them then
they takes them to the warehouses or to tracks and in each stage they lose Diesel for the
generators and the lose maintenance for each machine and the calculate the depreciation and in
this stage they need 2 labor they calculate their wages and then divide by the output and after this
stage the calculate the cost for each stage they get the total cost .
Approximately
Item Cost Per Bottle
Direct Material 5Y.R
Direct Labor 4 Y.R
Manufacturing overhead 3 Y.R
Total 12 Y.R
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Cost system of Al-Nahdain Mineral Water Company Ltd BACC500
Total cost
Approximately
Item Cost Per Pcs
Water extraction, treatment and 16 Y.R
purification (21.32 X 0.75 ML)
Injection and blowing Stage 49 Y.R
Filling Stage 13 Y.R
Label Stage 10 Y.R
Packaging Stage 12 Y.R
Total 100 Y.R
Recommendation
The company can use any of the traditional cost or activity cost system to reduce the cost of
closing account each month because closing each month cost a lot of expanses for employees to
do all this work each month so we recommend for the company to use the activity cost system
because it is more accurate than the tradition because they have more than one production line
so they can see from which product line they are getting more profit according to the accurate
cost, so when they use any of this systems the cost that was paid each month for the employees
to make the closing it will be reduce from the expanses which will increase the profit for the
company .
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