Question
Choco Sdn. Bhd. manufactures and sells a variety of furniture. The following budgeted information relates to one of its new products, cabinet, for the quarter
Choco Sdn. Bhd. manufactures and sells a variety of furniture. The following budgeted information relates to one of its new products, cabinet, for the quarter ending March 2021:
RM Sales (6,200 units) 607,600
Less: Cost of goods sold:
Direct material 161,200
Direct labour 148,800
Production overheads 127,200 =437,200
Gross profit 170,400
Less: Other costs
Selling and distribution overheads 110,400
Administrative overheads 25,000 =135,400
Net profit 35,000
Additional information related to the cabinet is as follows:
1. Variable production overheads are budgeted to be at RM11 per unit.
2. Variable selling and distribution overheads are budgeted to be at RM12 per unit.
3. Administrative overheads are fixed costs.
4. There is no opening inventory at the beginning of January 2021. All units produced are assumed to be sold.
Required:
(a) For the quarter ending 31 March 2021, calculate the following:
(i) Contribution per unit;
(ii) Break even point in sales units and sales value (to the nearest RM);
(iii) Sales units required to earn a targeted profit of RM72,000.
(b) The marketing manager has suggested that an incremental advertising cost of RM42,400 would be spent and this will increase the sales volume by 25%.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
a i Contribution per unit Sales per unit Cost of goods sold per unit Sales per unit RM6076006200 uni...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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