CQC7001 Question 2 Lolitech Sdn Bhd recently developed the technology necessary to produce a lowleconomy, medium/standard and high end computer memory chip for heart monitoring healthcare equipment. Budgeted fixed costs for the manufacture of all three products total RM4,250,000. The budgeted sales by product and in total for the coming year are as follows: Economy Standard High Amount Amount Amount (RM) Percent Percent (RM) Percent Sales 1,750,000 100% 4,000,000 100% 2.500.000 100% Variable costs 1.207.500 69% 1.000.000 25% 1,250,000 50% Contribution RM542,500 31% RM3,000,000 75% RM1,250,000 50% (RM) Actual sales for the year were not as planned; the following lists sales by product: Economy Standard High RM4,000,000 RM2,250,000 RM2,000,000 RM8,250,000 EEEEEEEEEE Required: a) Prepare a contribution income statement for the year based on actual sales data. (6 marks) b) Compare the breakeven sales dollars for the year based on both budgeted and actual sales, assuming that the sales mix remains constant in sales dollars. (6 marks) c) The company president knows that total actual sales were RM8,250,000 for the year, the same as budgeted. Because he had seen the budgeted income statement, he is expecting a nice profit from producing the memory chips. Explain to him what happened. (4 Marks) d) In a strategy meeting, the company's president said, "If we raise the price of our product, the company's break-even point will be lower." The financial vice president responded by saying, "Then we should raise our price. The company will be less likely to incur a loss." Do you agree with the president? Why? Do you agree with the financial vice president? Why? (4 marks) (Total: 20 marks) END OF SECTION A 3/6