NFR Electrical Sdn. Bhd. manufactures 20,000mAh power bank known as SaEnergy which is used for charging the electronic devices. The product is sold at RM130 per unit. The following data is obtained from the company's monthly operation:

Production and sales volume

60,000 units

Variable cost per unit:

RM

Direct material

15

Direct labour

10

Direct expenses

20

Variable production overhead

13

Variable selling overhead

12

Monthly fixed cost:

Production overhead

495,180

Selling and administration overhead

456,300

The Production Manager believes that by incurring an additional 2% of direct expenses and reducing fixed production overhead by 5% would increase the number of sales by 25%.

The Sales and Administration Manager otherwise believes that by purchasing highly sophisticated machine, which will cost the company RM1,875,000 with 8 years of useful life and no scrap value, would generate a 15% increase in sales as well as an increase in the number of unit produced. This machine requires less labour hours to produce the products. The Sales and Administration Manager estimates that half of the labour cost can be reduced.

Required:

(a)Determine the following:

i.Break-even point in unit and value (RM).

(2 marks)

ii.Net profit.

(4 marks)

(b)If the company desires a profit of RM1.5 million per month, calculate the number of power bank that should be produced.

(2 marks)

(c)Determine the impact on net profit according to:

i.Production Manager's strategy.

(9 marks)

ii.Sales and Administration Manager's strategy.

(8 marks)