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answer the question in english.show the calculate and formula.. AA025 PB 2_2020/2021 QUESTION 2 (25 MARKS) Dawood Suleiman Corp.'s sales slumped badly in 2020. For
answer the question in english.show the calculate and formula..
AA025 PB 2_2020/2021 QUESTION 2 (25 MARKS) Dawood Suleiman Corp.'s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 500,000 units of product: sales RM2 500 000; total cost and expenses RM2 600 000; net loss RM100 000. Cost and expenses consisted of amounts shown below. Cost of goods sold Selling expenses Administrative expenses Total cost (RM) 2 140 000 250 000 210 000 2 600 000 Cost behavior analysis indicates that 70% of the cost of goods sold are variable, 30% of selling expenses are variable and 40% of administrative expenses are variable. Instructions (Round to nearest unit, ringgit, and percentage, where necessary. Use the CVP income statement format in computing profits) i) Compute the break-even point in unit and ringgit in 2020. (8 marks) ii) Production manager proposed the plan to improve the profit for the year to come. He believes the quality of the product is prudent to sustain the market share. Therefore, the company should pay RM0.30 more on better raw materials. Hence, the selling price per unit could be increased to RM5.30, as to remain competitive. As a result, the sales volume presumes to increase by 30%. What effect would the production manager's plan have on the company's profit? (7 marks) iii) Sales manager also propose his plan due to his job specialties. He feels that the sales volume would increase only by intensive advertising and promotional campaigns. He, then propose the following plans as other option: a) Increase variable selling expenses to RM0.25 b) lower the selling price by RM0.20 c) Increase fixed selling expenses amounted RM50 000 Marketing report shows that adoption of this changes will result an increase of sales volume for 60%. What effect would the sales manager's plans have on the company's profit? (8 marks) iv) Which propose plan should Dawood Suleiman Corp.'s choose. State your reasons. (2 marks)Step by Step Solution
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