Question 2 (Total: 20 marks)

Aesya and Wahyu manufactures juicing machines. Each machine has a wholesale price of RM225. Variable costs of manufacture are RM56 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2020 was 3,561 machines, but the budget for 2021 is only 3,250 machines. Fixed costs for the year are budgeted at RM560,000.

You are required:

(a) Calculate the total contribution that can be expected at a sales level of 3,250 machines. (2 marks)

(b) Calculate the break-even point in units (to nearest whole unit) at the expected level. (2 marks)

(c) Calculate the break-even point in units if the selling price were to be increased by 10% (to nearest whole unit). (3 marks)

(d) Advise the companys directors on whether or not they should increase the selling price. Include in your answer three (3) options that the company might opt for. (10 marks)

(e) Marginal costing can provide useful information for decision-making. However, there are limitations to its usefulness. Identify and briefly explain two (2) of the limitations. (3 marks)