Answer the Question Below

6 CONFIDENTIAL CONFIDENTIAL MARCH 2021ISET BIMAC301IMAC2073 QUESTION 4 Bottle Enterprise sells bottled drink at RM3.00 each. During the year ended 31 January 2021. the business reports total sales revenue of RM1.620.000. The following total costs are extracted from the books of the business for the year: RM Direct materials 348.000 Direct wages 300.000 Variable production overheads 297.000 Fixed production overheads 227.000 Variable selling costs 81.000 Fixed administrative and selling overheads 196.000 Required: a. Calculate the following: i. Break even point (in units) and in value (RM). ii. Margin of safety (in units) and in value (RM). iii. Net prot if the current sales level is maintained. (11 marks) As an initiative to improve the nancial performance of the business. the management accountant of the business has been asked to evaluate the following proposals independently: Proposal 1 The company will undertake promotional campaigns that will cost the business an additional RM30.000 per annum. The annual sales units are expected to increase by 20% as the selling price is reduced by RMO.20. Proposal 2 The company plans to pay the salesman a commission of 10% on every unit sold to improve the sales volume by 20%. The annual xed production costs will be reduced to RM217.000 per annum. As the assistant accountant. you are asked to determine the effects of implementing the above proposals on the net income of the company and suggest which proposal should be chosen. Explain your answer. (12 marks) Explain any ONE (1) limitation of CVP analysis. (2 marks) (Total: 25 marks) (TOTAL: 100 MARKS) END OF QUESTION PAPER 7 CONFIDENTIAL