Answer Happy

Cendana Sdn. Bhd. manufactures special design furniture under the brand name Chorea. Last year 10,000 Shorea furniture were sold. The management is eager to oost Shorea sales and improve its present level of income. The net operating come for Shorea as follows: Sales Less: Variable expenses Contribution margin Less: Fixed expenses Net operating income Compute the followings: (i) Contribution margin ratio (ii) Break-even point (iii) Degree of operating leverage RM 5,000,000 (3,200,000) 1,800,000 (1,280,000) 520,000 (2 marks) (2 marks) (2 marks) Determine the quantity of Shorea furniture that have to be sold next year to earn the same net operating income as last year's if the company estimates that the variable cost will increase by RM70 per furniture next year. 3 (2 marks) Calculate the new selling price if the company maintains the same contribution margin ratio and considering that the variable cost will increase by RM70. (4 marks)
03 (d) The management is currently considering using an automated machine to produce the furniture. It is expected that this machine would reduce variable cost by 40%. However, at the same time, it will increase the fixed cost by 65%. (i) (ii) (iii) (iv) BPA11403 Calculate the company's new contribution margin ratio and the new break-even point. (4 marks) Calculate the number of Shorea furniture that have to be sold next year to earn the same net operating income as last year's? (2 marks) Compute the net operating income and degree of operating leverage if the company sells 10,000 Shorea furniture (same as last year). (4 marks) Explain whether the new machine is recommended. 2014 Mi (3 marks)