MA 2 : COST VOLUME PROFIT ANALYSIS

Zaza. a senior management accountant cf Lalang BB is currently reviewing the profitability of an existing product. In order to help the management to reach a decision about future production and sales plans. the accountant has produced some preliminary sales and cost data for next year, as follows: Expected eaiee 9,500 units Selling price mason per unit Direct material costs Ritimc per unit Direct Labour ccete RMBBCI per unit Fixed Costs Russo per unit Note that fixed production costs are based on expected output of 9,500 mils Required: a. compute the break-even point and margin of safety both in units and sales value {RM}. Describe to the management for the answers computed {in units}. [1 1 marks) compute the contribution margin ratio and the break-even sales revenue using CM ratio. {3 marks) What would be the effect on the Meat-even level sales units if the selling price of the product was Increase to RMSD per unit and management decided to increase advertising cost by M1000. {5 marks) Determine the number at units of the product that would need to be sold to achieve a prot of RMSSDGO In the next year, assuming that the sales price increased to RM35 per unit and the management agreed to decrease thexed costs by meme. {4 marks) Explain THREE (3] limitations ct ccet volume prot anaryeie. {5 marks)