Maha Sdn Bhd manufactures dining tables for the local market. For 2020, sales is estimated at 10,000 units.

The following information is obtained from the 2020 budget file:

Sales RM100,000

Fixed Cost (RM) Variable (RM)

Raw material30,000

Direct labor20,000

Overhead production10,00015,000

Sales and administration11,0005,000

Total cost 21,000 70,000 RM91,000

Estimated operating income RM 9,000

BE REQUIRED:

a) Calculate the break-even point in units and in value (RM).

(4 Marks)

b) How many desk units should be sold for a profit of RM6,000?

(4 Marks)

c) If fixed costs increase by RM3,150, calculate the new break-even point in the unit.

(4 Marks)

d) If the company spends RM1,500 for newspaper advertising, sales is estimated to increase to 12,000 units. Do you agree with company suggestions? Prove it by calculation.

(4 Marks)

e) Calculate the security margin in units and percentages.

(4 Marks)