The directors of Red Pink Sdn Bhd, a business which makes only one product, have been reviewing the following summarized

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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.
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)
Additional information
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)
(Total: 40
marks)