Question 1

Modern Footwear Industries manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price for its finished product is RM85 per pair. The variable cost is RM58. Modern Footwear incurs fixed costs of RM170,000 annually and interest paid is RM20,000. The current sales level of the company is 12,500 pairs of shoes. Required:

a. What is the break-even point in units and value (RM) for the company?

b. What is the break-even point in unit and value if the company's sales volume increase by 20%? Original sales volume = 12,500 units New sales volume = 15,000 units

c. Calculate the margin of safety (in units and value) of the company?

d. If the company plans to increase its current profit by 25%, what is the sales in units and value that they need to incur?

Question 2

Screen Ltd makes phone accessories and the following budget for the first half financial period: Selling price per unit RM 18 Variable production cost per unit RM 3.50 Fixed production costs RM 33,120 Fixed selling and administration costs RM 21,200 Sales 15,000 units (Jan June) Calculate the following:

a) The breakeven point (unit and value) and margin of safety (unit and value) for first half year.

b) If the company plans to increase the sales volume by 10% for the second half year, calculate the new break-even (unit and value) and margin of safety of the company (unit).

c) If the company plans to increase the sales volume by 10% for the second half year. This would affect the selling price (increase by 5%) and variable cost (increase by 10%). Calculate the new break-even (unit and value).

Question 3

Ariani Sdn Bhd is a company that sells women accessories. The following information shows the extract of one of the accessories (headwear) sold by Ariani for the first half year: RM Selling price (per unit) 135

Direct material (per unit) 20

Direct labour (per unit) 35

Direct expense (per unit) 10

Office rental (per month) 12,000

Salaries (per month) 25,000

Other expenses 57,000 Additional information:

i) Ariani managed to sell 40,000 units of headwear for the first half year. The company plans to increase the sales volume by 10,000 units for the second half year.

ii) In the second half year, direct material and direct expense increased by 20%. Required: a. Calculate the profit incurred by Ariani Sdn Bhd for the first half year. b. Calculate the break-even point in value and unit for the first half year.

c. Calculate the margin of safety in value and unit for the first half year.

d. Calculate the break-even point in value and unit for the second half year.

e. Calculate the margin of safety in value and unit for the second half year. f. Calculate the sales in unit and value if the company want to increase its profit by 20% for the second half year.