CAN YOU HLEP ME OUT PLEASE!
Sedaprasa Sdn Bhd is a newly formed company in the catering business founded by Kamarul and Nabila. Kamarul and Nabila have considerable experience in the food industry and saw an opportunity to establish a food beverage business to service the tourist market during the four months from April to July. The business will be located in Melaka and permission has been obtained from Melaka City Council (MCC) to operate a fixed heverage outlet near Klebang bcach. At present Kamarul and Nabila are trying to decide between two possible food/beverage options. Pertinent information relating to each of the options is shown below. Initially, Kamarul and Nabila intend to operate the outlet themselves without employing any other staff. Option 1- Corn Dog on the Beach The food outlet would offer korean style com dog with a cheese. Costings Rather than having a range of selling prices a fixed price has been set for each com dog and this price is midway between the highest and lowest prices expected. Additionally, an average variable ingredient cost has been computed based on possible cheese fillings. Other relevant information is as follows: Selling price per corn dog (Budgeted sales 16,800 corn dog) RM3.20 Average variable ingredient cost per corn dog RM1.20 Other variable costs (disposable cutlery, packaging etc.) 20% selling price Licence fee payable to MCC RM1,600 Rent of premises (including tables, chairs ctc.) per month RM2,000 Insurance for four month period RM1,296 Option 2 - Coconut Shake Slurpp This beverage outlet would offer a range of beverages using secret recipe. Costings Again a fixed price has been set for all coconut shake beverages and this price is midway between the highest and lowest prices expected. Additionally, an average variable ingredient cost has been computed based on ice crearn, ive and other flavourings that may be used in making this coconut shake. Other relevant information is as follows: Selling price per cup of coconut shake (Budgeted sales 12,000 cups of coconut shake) RM3.50 Average variable ingredient cost per cup of coconut shake RM, 75 Other variable costs (disposable cups, spoons, etc.) 10% selling price Licence fee payable to MCC RM1,600 Rent of premises (including tables, chairs etc.) per month RM2,000 Insurance for four month period RM1,296 a. For EACH option: i. Compute the breakeven point in sales revenue. (11 marks) ii Compute the number of units that would have to be sold to reach Sedaprasa Sdn Bhd's target net income of RM17,500. (4 marks) iii. Compute the margin of safety in units and percentages, if actual sales achieved are cqual to budgcted sales. (8 marks) h. Recommend which option Sedaprasa Sdn Bhd should choose? Justify your answer, (2 marks)
