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Question 1 The summarized Profit and Loss Statement of Daun Serai Berhad (DSB) for the Year Ended 30 June 2021 is as follows: RM'000 RM'000
Question 1 The summarized Profit and Loss Statement of Daun Serai Berhad (DSB) for the Year Ended 30 June 2021 is as follows: RM'000 RM'000 1,000 Sales (50,000 units) Direct materials Direct wages Fixed production overhead Variable production overhead Fixed Administration overhead Fixed Selling and distribution overhead 350 200 200 50 180 120 Profit /(loss) (1,100) (100) At a recent board meeting, the directors discussed the year's result which the chairmen asked for suggestions to improve the situation. As a management accountant, you are required to evaluate the following alternative proposals and to comment briefly on each: a. Pay salesman a commission of 10% of sales and thus expect an increase in sales to achieve breakeven point. b. Reduce selling price by 10% which it is estimated to increase sale volume by 30%. C. Increase direct wage rate from RM4 to RM5 per unit as part of productivity deal. It is hoped that this would increase production and sales by 20%, but advertising costs would need increase by RM50,000 d. Increase sale by additional advertising of RM300,000 with an increase selling price of 20%, setting profit margin of 10%
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