Q4 AXERS Caps Sdn Bhd manufactures and sells caps for different sporting events. The company's fixed operating cost is RM150,000 per month, and the variable cost for caps is RM5 per unit. The caps are sold for RM8 per unit. The fixed costs provide a production capacity of up to 100,000 caps per month. (a) Determine: (i) The contribution margin per cap. (ii) The contribution margin ratio. (2 marks) (2 marks) (iii) The break even point in terms of the numbers of cap produced and sold. (2 marks) (b) In response to a new market strategy, the company's marketing director is asking an increase of RM 3,000 per month in her monthly budget for advertising purposes. She estimated that the advertising will increase sales of caps up to 80,000 caps per month and targeted net income of RM95,000.Selling price and variable cost are maintained at the original costs. Find the new contribution margin per unit. (4 marks) (c) The plant manager does not completely agree with the marketing director's targeted net income projections. He claims that the increase in demand for the company will put pressure to the plant's production capabilities and will increase the direct labour costs of approximately RM0.10 per unit, thus reducing the net income projections. His assumption is based on the same level of sales projection at 80,000 units and the selling price is maintained. Calculate the new targeted income. (6 marks) CONFIDENTIAL CONFIDENTIAL BPA 11403 (d) The sales director suggested that a "win-win situation between the marketing director and the plant manager could be achieved if the selling price of the caps is increased. Assume that the targeted sales unit and targeted net income of the marketing director's projection is maintained whilst the increase in variable cost and increase in fixed costs are also considered. Compute a new selling price for the caps. (9 marks)