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B. Quartz Sdn Bhd is specializing in producing alarm clock. The company is currently producing and selling one type of alarm clock known as Princess
B. Quartz Sdn Bhd is specializing in producing alarm clock. The company is currently producing and selling one type of alarm clock known as Princess Frozen Clock. The costs and revenues of Princess Frozen Clock based on the annual output of 50,000 units are as follows: Selling price per unit RM 50.00 Cos per unit: Direct material RM 10.00 Direct labour RM 8.00 Variable production overhead RM 5.00 Variable selling and distribution RM 2.00 Non-Production Cost: Fixed production overhead RM 120,000 Fixed selling and distribution RM 90,000 Fixed administration RM 40,000 Net Profit RM 1,000,000 Required: (Each question is to be treated independently) i. Calculate the break-even point in units and in value. ii. Calculate the margin of safety in units and in value. iii. If the company plans to sell 70,000 units of Princess Frozen Clock in a year, calculate the estimated net profit to be earned by the company. iv. The company estimated that the direct labour cost per unit will increase by 20% and fixed selling and distribution expenses will increase by RM10,000. Predict the selling price needs to be set for Princess Frozen Clock if the company wish to maintain the current net profit and current sales volume. v. Assume that for the following year, an additional advertising costing RM30,000 is proposed, whilst at the same time the selling price is to be increased by 30%. Determine the new break-even in units and in value. (15 marks)
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