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Koko Disc Sdn Bhd (KDSB), manufactures and sells compact disc. Price and cost data are as follows: RM Selling price per unit 25.00 Variable cost

Koko Disc Sdn Bhd (KDSB), manufactures and sells compact disc. Price and cost data are as follows:

RM

Selling price per unit

25.00

Variable cost per unit

Direct Material

9.00

Direct labour

3.00

Manufacturing Overhead

2.00

Selling Expenses

1.00

Total Variable Cost per unit

15.00

Annual fixed costs

Manufacturing Overhead

192,000

Selling and administrative costs

276,000

Total Fixed Costs

468,000

Forecasted annual sales volume (120,000 units)

3,000,000

Required:

  1. Calculate KDSBs break-even points in units and in RM.

  1. How many units would KDSB have to sell in order to earn a net profit of RM300,000.

  1. Calculate KDSBs margin of safety in units and in RM.

  1. Management estimates that direct-labour costs will increase by 10% next year. How many units KDSB have to sell next year to reach the current break-even point.

  1. If KDSBs direct-labour costs do increase by 10%, calculate the new selling price that KDSB needs to charge in order to maintain the same contribution margin ratio as before.

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