Question 1 Venus Ltd is a company engaged solely in the manufacture of sweaters, which are bought mainly for sporting activities. Present sales are direct to retailers, but in recent years there has been a steady decline in output because of Covid - 19 pandemic. In the last year 2020, the accounting report indicated that the company produced the lowest profit for 10 years. The forecast for 2021 indicates that the present deterioration in profits is likely to continue. The company considers that a profit of RM 500,000 should be achieved to provide an adequate return on capital. The managing director has asked that a review be made of the present pricing and marketing policies. The marketing director has completed this review and passes the proposals on to you for evaluation and recommendation, together with the profit and loss account for year ending 31 December 2020. Sales (280,000 units @ RM 18) Factory cost of goods sold: - Direct materials - Direct labour Variable factory overhead RM 480,000 RM 5,040,000 1,200,000 760,000 Fixed factory overhead 880.000 (3.320.000) Contribution 1,720,000 Administrative overhead (680,000) Selling and Distribution overhead: Commission (5% of sales) 252,000 Delivery cost (25% of variable factory overhead) 190,000 Fixed cost 320,000 (762.000) Profit 278,000