Question 1 (a): Accounting for Intangible Assets Sweet Limited, a New Zealand ic

Question

Question 1 (a): Accounting for Intangible Assets

Sweet Limited, a New Zealand ice-cream manufactory, is trying to develop a new flavour of ice-cream. The marketing department conducted a survey in August 2011 to assess consumer preference for the best flavour(s). The survey result shows that hazel-nuts toffee flavour is the most popular one in NZ and Australia. The cost of the survey is $20,000.

The production department needs to identify some possible suppliers for the hazel-nuts and coffee beans used in producing toffee flavour ice-cream. The traveling expenses in visiting possible suppliers and checking on quality of the raw materials amount to $30,000. These expenses were incurred during November 2011 to February 2012.

In April 2012, the production department produced some hazel-nuts toffee ice-cream for testing. The cost of producing these ice-creams was $25,000. These ice-creams are used for another marketing research. The second round research costs amount to $15,000. This time the consumers were asked to evaluate the taste and to determine how much they would like to buy it for. After a few more rounds of testing in May and June 2012, consumers show a satisfaction of the taste and they are willing to pay $8 per container (1 litre container). The cost of production is $2.5 per container. The overhead per container is $.50 cent. The marketing department estimates 1 million containers of hazel-nuts toffee ice-cream can be sold annually.

Sweet Limited’s balance date is 31March.

show the working plz....

Explanation / Answer

The marketing department estimates 1 million containers of hazel-nuts toffee ice-cream can be sold annually. balance date is 31March. ======================================================================================================================================================================================== credit debit cost of survey $20,000 ================================================================================================================================ travelling expense $30,000 ========================================================================================================================================== cost of producing icecream $25,000 ========================================================================================================================================== second round research expenses $15,000 =============================================================================================================================================================================================== Total = $90,000 ======================================================================================================================================================================================== cost of one container= 2.5+.5= $3 ====================================================================================================================================== estimated quantity to be sold= 1,000,000 ================================================================================================================================ estimated revenue= 1,000,000x8= $8,000,000 ========================================================================================================================================================================================================== cost for 1 million containers of hazel-nuts toffee = $3,000,000 ================================================================================================================================================ Profits= $8,000,000 -$3,000,000 =$5,000,000 ANSWER

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