Question
Question 2 Wildlife Escapes Sdn Bhd generates average revenue of RM9,200 per person on its five-day package tours to wildlife parks in Africa. The variable
Question 2
Wildlife Escapes Sdn Bhd generates average revenue of RM9,200 per person on its five-day package tours to wildlife parks in Africa. The variable costs per person are:
| RM |
Airfare Hotel accommodations Meals | 3,500 1,200 480 |
Ground transportation | 920 |
Park tickets and other costs | 240 |
Annual fixed costs total RM1,287,000.
Required:
a) | Calculate the number of package tours and sales value that must be sold to break even.
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| (2 marks) |
b) | Calculate variable cost ratio and contribution margin ratio. | |
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| (2 marks)
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c) | Calculate the unit and sales revenue needed to earn a target profit of RM214,500.
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| (2 marks) |
d) | Based on (b) calculate margin of safety in units, in sales value and percentage. (Round your answer to two decimal places) | |
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| (3 marks)
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e) | If fixed costs increase by RM40,500, what will be amount of variable costs per unit must be achieved to maintain the breakeven point as calculated in requirement (a)? | |
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| (4 marks)
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f) | Based on information in (b), marketing manager propose that company can increase revenues by 30% by investing on additional advertising costs of RM130,000.
Required: | |
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|
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| i) | Prepare current and revised contribution margin income statement. |
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| (4 marks)
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| ii) | Calculate the percentage change in operating income and comment the impact of revenues on this action. |
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| (4 marks) |
| iii) | Calculate the current and revised degree operating leverage (DOL). Compare and comment on your findings. |
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| (6 marks) |
| iv) | Should management accept the managers proposal? Why. |
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| (3 marks) |
(30 Marks)
ATTENTION PLEASE
I JUST NEED ANSWERS FOR (i), (ii), (iii), (iv)
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