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a) Always One Engineering Sdn. Bhd (AOESB) currently produces special shaft with the cost stated in Table 5. With industrial revolution 4.0, this company can
a) Always One Engineering Sdn. Bhd (AOESB) currently produces special shaft with the cost stated in Table 5. With industrial revolution 4.0, this company can substantially improve the production capacity by installing a special equipment with an additional fixed cost of RM 50,000. In addition, variable cost per unit would increase by RM 1.50. It is expected that the changes could produce better quality and the annual sales volume would increase to 50,000 units. As an expert in the industrial engineering field, you are required to assist AOESB on related question as highlighted below. Table 5 Material cost RM2 per unit Labour cost RM2 per unit Overhead cost RM1 per unit Machine cost RM140,000 Selling price RM10 per unit Annual sales volume 30,000 units i. ii. Do you think Always One Engineering should invest for special equipment? Support your answer with breakeven and profit/loss analysis. Show all calculations and graph analysis. What is the new selling price for both situations if the AOESB requires a break-even at 20000 units? Suggest three possible solutions to increase the profit. [25 Marks] tii
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