- Rara Company Produces Component T That Is Used For Furniture Assembly The Company Needs To Incur The Variable Cost Such 1 (52.18 KiB) Viewed 11 times
- Rara Company Produces Component T That Is Used For Furniture Assembly The Company Needs To Incur The Variable Cost Such 2 (58.18 KiB) Viewed 11 times
- Rara Company Produces Component T That Is Used For Furniture Assembly The Company Needs To Incur The Variable Cost Such 3 (58.18 KiB) Viewed 11 times
RARA Company produces component T that is used for furniture assembly. The company needs to incur the variable cost such as materials RM5 per unit, Labor RM1 per unit, and variable overhead RM14 per unit. From the financial statement, it also shows that the company have paid RM20,000 monthly rental, vehicles RM 100,000 and other fixed cost RM300,000. The sales price is RM35 per unit. a) Identify the Total Cost to produce component T. (4 marks) b) Identify quantity for Break Even Point (BEP) of component T. Subsequently, draw a graph and show the details required in BEP graph. (5 marks) a) Calculate the contribution to the sales ratio. Interpret the meaning and comment on the value. (3 marks) b) If the targeted profit of component T is RM420,000, what is the quantity need to be produced and sold? (3 marks) c) RARA Company is able to produce extra 40,000 units but it depends on the demand. If a customer wants to order and is able to pay RM22 per unit with the quantity ordered is 40,000 units, does the company should accept or reject the production of extra units? Comment and give your justification. Use marginal costing approach for this case.