OBJECTIVE The purpose of this assignment is to enable students to understand an organisations cost classification and also to apply the cost concepts in cost volume profit analysis. REQUIREMENT You are required to answer the assignment question individually. QUESTION Super-Elegant Corporation (SEC) sells numerous styles of hats. The business is very competitive. Because of the rapid growth in sales, Mr. Trump, the owner of SEC, finds that it is very difficult to manage the business recently, particularly in the aspect of restocking of inventory and hiring and training new salespeople. Mr. Trump is planning to use cost volume profit analysis to help him to understand his business. To do this, his accountant has gathered the following information for 2019: RM Direct materials 600,000 Factory security guard's salary 105,000 Administrative executive salaries 100,000 Variable shipping expenses 150,000 Rental of factory 110,000 Direct labor cost 650,000 Fixed sales personnel Salaries 105,000 Sales commissions 200,000 Advertising 120,000 Factory supervisors salaries 105,000 Depreciation on factory equipment 80,000 Rental of administrative office 100,000 The company estimates that quantity sold and produced will be 25,000 units per year. Each hat has approximately the same price, i.e. RM114 per unit. Sales personnel receive sales commission to encourage them to be more aggressive in their sales efforts. 3. Mr. Trump is considering the elimination of sales commission completely and increasing salaries by RM103,000 annually. a. Compute new breakeven point in units. (4 marks) b. Prepare new contribution income statement if 20,000 units of hats are sold with the new salary plan. (4 marks) c. Would you recommend Mr. Trump to change the salary plan? Explain. (Hint: Compare the breakeven point and net income before and after the change in the salary structure) (3 marks) (Total: 20 marks) (GRAND TOTAL: 30 MARKS)

You have answered No.1 and 2.What is the answer for number 3 (a,b and c)?