Exam (elaborations)
BUS 5110 Unit 2 Discussion Assignment.
- Module
- Institution
A guide to assignment on manufacturing cost consisting of material, labor and manufacturing overhead with a specific case for Unilever Plc.
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Unilever Nigeria Plc. was established in 1923 as a soap manufacturing company – West AfricaSoap Company– by Lord Leverhulme. It later became known as Lever Brothers Nigeria. They
have over 400 household name brands out of which 13 turned over more than €1 billion in 2020
(Unliever, 2020).
Unilever Nigeria Plc. is a member of the Unilever Group, one of the world's leading consumer
goods companies whose food (Blue Band Margarine, Lipton Yellow Label Tea, Royoco bouillon
cubes), home and personal care brands (OMO detergent, Sunlight washing powder, and sunlight
dishwashing liquid, Close-Up toothpaste, Pepsodent toothpaste, LUX beauty soap, Lifebuoy
soap, Rexona, Pears Baby products range, Vaseline lotion and petroleum jelly) are used by 2.5
billion people all over the world on any given day (Nigerian Finder, 2020a).
Based on the Unilever Annual Report and Accounts 2020, the Group generated a turnover of
€50.7 billion, operating profit of €8.3 billion, net profit of €6.1 billion, and free cash flow of €7.7
billion.
The manufacturing costs are dividing into three which are direct material, direct labor, and
manufacturing overhead. For Unilever Nigeria Plc. the direct material costs include raw
materials which are mostly agricultural products. They source the materials from the farmers and
other intermediaries.
Direct labor includes all personnel involved in the production process. The company has around
149,000 staff of which most of them are involved in the production process. The manufacturing
overhead includes indirect material costs, indirect labor costs, and other manufacturing costs.
The indirect labor costs include supervisors involved with quality control and the hiring process.
Other manufacturing costs include including equipment maintenance, insurance, utilities, and
depreciation.
The direct material cost, direct labor cost and a portion of manufacturing overhead are
considered variable cost because it depends on the units or product produced. The more products
produced the higher the direct material cost. From the manufacturing overhead, the indirect
material costs and indirect labor costs are variable whereas the rest like insurance, depreciation,
and utilities are fixed costs.
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