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Q.4.1. Dontrumnomo Co. is thinking about modernising its very old factory producing premium head cover. It now seils its premium head covers for RM 500
Q.4.1. Dontrumnomo Co. is thinking about modernising its very old factory producing premium head cover. It now seils its premium head covers for RM 500 each. At 10,000 units of production, the details for the costs are: At 10,000 units RM Direct raw materials 1200000 Durect labour 500000 Variable manufacturing overhead 700000 Fixed manufacturing overhead 460000 Variable selling and administrative expense 1100000 Fixed selling and administrative 1600000 Q.4.1.2 Calculate the breakeren quantity (6 marks) Format : 7383Q4.1.b. If the proposed modernisation is carried out the new factory would have 60% additional fixed costs per year, but its variable costs would decrease by RM30 per unit. What would be the new break-even point now? (4 marks) Format : 65905Q.4.1.6.11. Referring Q.4.1.b.i, if the company wanted to maintain the previous breakeven quantity as per operation of the old factory, what NEW price would it have to charge for a premium head cover! (3 marks) Format : 726Q.4.1.c. If sales are projected to reach 30,000 units per year in the near future, would you recommend the construction of the modern factory? Why or why not? Show ALL your calculations in the working to be attached (Assume that both old and modern factories have the capacity to produce this quantity and the selling price remains the same) (7 marks) Format AQ42. Briefly explain an example each for (1) OPPORTUNITY COST (2) SUNK COST; & (3) DIFFERENTIAL COST. Make sure you do not use text book examples. Write your explanation in the working to be submitted (5 maks) Format: A
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