Sales (60,000 units) RM4,800,000 Direct material cost RM1,680,000 Direct Labour cost RM 960,000 Production Overhead RM1,
Posted: Mon Apr 25, 2022 7:20 am
Sales (60,000 units)
RM4,800,000
Direct material cost
RM1,680,000
Direct Labour cost
RM 960,000
Production Overhead
RM1,040,000
Administration overhead
RM 720,000
Selling Overhead
RM 480,000
(RM4,880,000)
Loss
(RM 80,000)
QUESTION 1
The directors of Red
Pink Sdn Bhd, a business which makes only one product, have been
reviewing the following summarized profit and loss account for the
quarter just ended.
Additional
information
(1) The production
overhead includes variable production overhead at RM4.00 per unit.
Administration overhead and selling overhead are fully fixed.
Required:
a.
Contribution per unit and contribution
sales ratio c/s
ratio.
(2 marks)
b.
The break-even point in units and
value.
(2marks)
c.
The following
alternative proposals have been put forward to improve profits in
the current quarter. Determine the target profit
expected and break-even point (to the nearest unit of
product) for each of the following
alternative proposals separately:
(i)
Reduce selling price by 10% , expecting
sales volume to increase by 40%
(4 marks)
(ii)
Reduce fixed cost by
5%
(4 marks)
(iii)
Increase wage rate by
25%, expecting production and sales volume to increase by 20%
(4 marks)
(iv)
Introduce cost
reduction programme to reduce prime cost by RM4 per unit. Spend
RM400,000 on advertising and expect sales volume to increase by
10%.
(4 marks)
d.
Critically evaluate the importance of
cost-volume profit analysis in managerial
decision
making.
(20 marks)
RM4,800,000
Direct material cost
RM1,680,000
Direct Labour cost
RM 960,000
Production Overhead
RM1,040,000
Administration overhead
RM 720,000
Selling Overhead
RM 480,000
(RM4,880,000)
Loss
(RM 80,000)
QUESTION 1
The directors of Red
Pink Sdn Bhd, a business which makes only one product, have been
reviewing the following summarized profit and loss account for the
quarter just ended.
Additional
information
(1) The production
overhead includes variable production overhead at RM4.00 per unit.
Administration overhead and selling overhead are fully fixed.
Required:
a.
Contribution per unit and contribution
sales ratio c/s
ratio.
(2 marks)
b.
The break-even point in units and
value.
(2marks)
c.
The following
alternative proposals have been put forward to improve profits in
the current quarter. Determine the target profit
expected and break-even point (to the nearest unit of
product) for each of the following
alternative proposals separately:
(i)
Reduce selling price by 10% , expecting
sales volume to increase by 40%
(4 marks)
(ii)
Reduce fixed cost by
5%
(4 marks)
(iii)
Increase wage rate by
25%, expecting production and sales volume to increase by 20%
(4 marks)
(iv)
Introduce cost
reduction programme to reduce prime cost by RM4 per unit. Spend
RM400,000 on advertising and expect sales volume to increase by
10%.
(4 marks)
d.
Critically evaluate the importance of
cost-volume profit analysis in managerial
decision
making.
(20 marks)