QUESTION $2$

You are invited to attend your company's management meeting at the beginning of the

year to decide on the company's tendering strategy to remain competitive in the market.

The accountant informed in the meeting that the company's overhead cost is around

RM$800,000$ per year. The shareholders request that the company pay $10\%$ dividend for

their RM$500,000$ shares in the company. With the existing set up$,$ your company can only

undertake a total value of job not exceeding RM$16,000,000.$ You are asked by the chief

executive director to recommend the company's policy on the following matters. Show

your calculation to support your recommendation: $-$

a$)$ Determine the average profit and markup for each project to meet the company's

financial obligation. Assume that the company will be able to secure

RM$16,000,000$ worth of job.

$(10$ marks$)$

b$)$ Your company has added profit and overhead mark$-$up of $10\%$ to the direct cost

for the job tendered last month. The job was awarded to the lowest bidder with the

price of RM $7\mathrm{.}6$ million. Your company's tender price for the job was RM $8\mathrm{.}0$ million.

Recommend the profit and overhead markup to be applied by your company to be

the lowest bidder.

$(10$ marks$)$

c$)$ Your company tried to get the job in the next tender at the very competitive price

without any profit and overhead markup but it still landed at the third lowest among

the bidders. Explain why this scenario happened and give suggestion to overcome

the problem.