4

Yuan Sdn. Bhd. (YSB) produces and sells strings of colourful indoor lights for holiday display to retailers for RM8.42 per strings. The variable costs per strings are as follows:

Direct materials	1 .87
Direct labour	1 .70
Variable factory overhead	0.57
Variable selling expense	0.42

Fixed factory overhead cost totals RM245,650 per year. Fixed administrative cost totals RM301 ,505. YSB expects to sell 225,000 strings of light next year.

Required:

a) Calculate break even point in units and RM.

(4 marks) b) Calculate margin of safety in units and RM.

(4 marks) c) How many units must be sold to earn profit of RM500,000?

(4 marks)

d) Suppose YSB actually experiences a price decrease next year while all other costs and the number of units sold remain the same. Would this increase or decrease risk for the company? Justify your answer.

(3 marks)

(Total: 15 Marks)

5

Kyra Sdn. Bhd. (KSB), which produce product A has provided the following data concerning its most recent month of operations:

Selling price per unit	RM70
Units in beginning inventory	400
Units produced	10,000