Question 1 RUOK Sdn Bhd produces and sells mobile phone cases. Malaysia is in the phase of recovery after the pandemic and the demand for the company's product has increased. The company's income statement for the most recent month is given below: Sales (6,000 units at RM25 per unit) RM150,000 Less manufacturing costs: Direct materials Direct labor Variable factory overhead Fixed factory overhead RM35,000 24,000 13,000 25,000 RM97,000 RM53,000 Gross profit Less selling and other expenses: Variable selling and other expenses Fixed selling and other expenses 18,000 25,000 RM43,000 Net operating income There are no beginning or ending inventories. Required: i. RM10,000 Without resorting to any computation, determine the total contribution margin (CM) at break-even point. Explain your answer. (4 marks) ii. Compute the R U OK Sdn Bhd's contribution margin (CM) ratio. (6 marks) iv. Using the CM ratio in (ii), compute the company's monthly net operating income if sales increased by 30%. (4 marks) Compute the company's monthly break-even point in units of product. (3 marks) ACC3208 /Page 2 of 5 v. vi. The company proposes to use an upgraded quality of direct materials. This will increase the direct materials cost by 50 percent and reduce direct labor costs by 50 percent. The company will triple the cost of advertisement to aggressively promote the product and expect to increase sales by 30%. The current advertisement cost is RM10,000. Compute the new a) CM per unit. (Round up to 2 decimal points) b) break-even point in units. c) net operating income (10 marks) Based on your answers in (v), discuss whether the company should proceed with its proposal. (3 Marks) Total: 30 marks