Jungle Adventure Sdn. Bhd. (JASB) manufactures a variety of products. One division produces gas grill outdoor cooking stove. The division's projected income statement for year 2016 is as follows:

RM

Sales (120,000 units) 7,500,000

Less: Variable expenses3,450,000

Contribution margin4,050,000

Less: Fixed expenses3,375,000

Operating income675,000

REQUIRED:

(a)Compute the contribution margin per unit and contribution margin ratio for JASB. Calculate the break-even point in units and in RM.

(b)The divisional manager has decided to increase the advertising budget by RM100,000 and cut the average selling price to RM58. These actions will increase sales revenue by RM1,000,000. Will this decision improve company's operating income?

(c)Suppose sales revenues exceed the estimated amount of the income statement by RM540,000. Calculate the amount of profit that is underestimated.

(d)How much many units to be sold to earn a profit of RM1,254,000.

(e)Compute the degree of operating leverage for JASB. If sales revenue increases by 20 percent, what is the percentage of increase in profit?