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PART A Hot Savory Sdn Bhd (HSSB), a manufacturer of waffle makers, has experienced a slow growth in sales over the past 2 to 3
PART A Hot Savory Sdn Bhd (HSSB), a manufacturer of waffle makers, has experienced a slow growth in sales over the past 2 to 3 years. Because of this, Encik Deen, the vice-president of sales believes that he needs an aggressive advertising campaign next year to boost the company's growth. In order to plan for next year, Puan Aliah, the accountant, prepared the following data for the current year. Variable cost per waffle maker: Direct materials Direct labour Variable overhead Fixed costs: RM14.50 RM13.50 RM6.00 Manufacturing Selling Administrative Selling Price per unit Expected sales (units) RM82,500 RM42,000 RM356,000 RM67.00 30,000 1. If the costs and sales price remain the same, what is the projected operating profit for the coming year? (3 marks) 2. Encik Deen has set the sales target for 35,000 waffle makers, which he thinks he can achieve by an additional fixed selling expense of RM200,000 for advertising. All other costs remain as per the data in the above table. What will be the operating profit if the additional RM200,000 is spent on advertising and sales rise to 35,000 units
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