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3 Kick Soda Sdn Bhd. is the authorized commercial producer of the Rootbeer Soda soft drink, which is made in one of Pahang's industrial zones.
3 Kick Soda Sdn Bhd. is the authorized commercial producer of the "Rootbeer Soda" soft drink, which is made in one of Pahang's industrial zones. They sell soft drinks at Kuantan's 250 schools. The management accountant has gathered all the data on predicted operations in order to build the company's financial strategy for the year 2021. The following is a breakdown of the costs: Expected sales volume Variable cost: Cost of material Cost of labour Selling and distribution Administration expenses Other overhead expenses 200,000 bottles per annum RM 2.15 per bottles RM 0.60 per bottles RM 0.25 per bottles RM 120,000 per annum RM 50,000 per annum Additional information: (i) The soft drink is sold at RM 5.00 per bottles. (ii) (iii) For the administration expenses, 60% in a fixed cost, while the remaining is a variable cost. For other overhead expenses, 20% is variable cost and the balance is fixed cost. Required: (a) Calculate the following: i. Break-even point in bottles and value (5 marks) ii. Total net profit for the year (6 marks) iii. Margin of safety in bottles and value (b) (4 marks) ii. The cost of materials is expected to rise by 20%, while total fixed costs are expected to rise by RM13,000 per year: i. Calculate the number of units that must be sold for the company's net profit to be maintained. Assume that the rest of the data is unchanged. (4 marks) Determine a new break-even point and margin of safety in bottles if the selling price change to RM 6 per packet. Assume that all other variables remain constant
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