ABC Sdn Bhds profit plan for the year of 2019 is summarized below:

Items	RM	RM
Sales (20,000 units)		1,000,000
Manufacturing costs:
Material	85,000
Labour	80,000
Fixed overhead	132,500
Variable overhead	202,500
Distribution costs:
Fixed	170,000
Variable	95,000
Administration costs:
Fixed	87,500
Variable	17,500
Total costs		870,000
Profit before tax		130,000

Determine the following:

(i) Compute the variable cost ratio and the P/V (contribution margin) ratio.

(6 marks)

(ii) What is the breakeven point in RM? In units? (8 marks)

(iii) Calculate margin of safety in RM & %. (5 marks)

(iv) Assume that the management is considering revising the sales price downward by 10%. The price decrease is expected to bring about a 20% increase in sales volume.

• Is the revised price a better alternative? (show calculation). (4 marks)

• What is the new breakeven point in units & in RM ? (8 marks)

• What is the new margin of safety in RM & in % ? (6 marks)