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please solve tq QUESTION 3 PART A Dawood Sdn. Bhd. manufactures tyres. The company has a standard tyre that sells for RM25 each. At present,
please solve tq
QUESTION 3 PART A Dawood Sdn. Bhd. manufactures tyres. The company has a standard tyre that sells for RM25 each. At present, the standard tyre is manufactured in a small plant that relies heavily on direct labour workers. Thus, variable costs are high, totaling RM15 per tyre. Last year, the company sold 30,000 standard tyres, with the following results: RM Sales (30,000 standard tyres) 750,000 Less: variable expenses 450,000 Contribution margin Less: fixed expenses 300,000 210,000 Net income 90,000 (3 marks) e) Refer to the original data. The company is discussing the construction of a new, automated plant to manufacture the standard tyres. The new plant would cut variable costs per tyre by 40%, but it would cause fixed cost to double in amount per year. If the new plant is built, what would be the company's new contribution margin ratio and the new break-even point in units? (3 marks) f) Refer to data (e) above. If the new plant is built, how many tyres will have to be sold next year to earn the same net income (RM90,000) as last year? (3 marks) g) If you were a member of top management, would you have voted for the construction of the new plant? Explain briefly. (2 marks)Step by Step Solution
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