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Delicious Butter has released a new cake called Pretty Sweety. Sales price of this cake is RM95. Management found that the cake is relatively
Delicious Butter has released a new cake called Pretty Sweety. Sales price of this cake is RM95. Management found that the cake is relatively slow for several reasons. Miss Alia, as management accountant, she is required by Chief Executive Officer to make short term planning. Some information has already been gathered to make her plans. Variable Costs Sales Commissions Other Variable Costs Purchased (unit) * Fixed costs amounted to RM20,500 RM (per unit) 10 15 20 Required: A. Compute the break-even point in RM and unit using contribution margin method. (6 marks) B. Compute total unit sold if a company's target profit is RM35,000. (3 marks) C. Compute the break-even point in RM and unit if commission to agent have been increased to RM20. Explain whether or not this idea able to encourage sales. (5 marks) D. Compute Delicious Butter's net income if the company sells 2,500 units of cake. (2 marks) (2 marks) E. Compute Pretty Sweety"s operating leverage. F. If sales decline by 30%, what will be the impact on the Delicious Butter's net income? (Use operating leverage method to explain your answer) (2 marks)
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