Question 3

Barbie Sdn Bhd (BSB) manufactures and sells a single product which is a barbie doll. Following information are provided below:

RM

Manufacturing costs:

Direct materials cost per unit 55

Direct labor cost per unit 45

Variable overhead cost per unit 36

Fixed overhead cost in total 51,000

Selling expenses:

Variable selling expenses per unit 14

Fixed selling expenses in total 18,000

The selling price for each unit of barbie doll is RM220.00.

Required:

a) Differentiate between variable cost and fixed cost. Calculate the total variable cost per unit and total fixed costs for the year. (4 marks)

b) Calculate the contribution margin per unit and contribution ratio. (4 marks)

c) Calculate the break-even in unit and in Ringgit Malaysia (RM). (4 marks)

d) Assume that BSB managed to sold 3,650 units, calculate the profit of the company for the current year. (3 marks)

e) What is the total sales that must be generated for the company to earn a profit of RM230,000? (5 marks)

f) Compute the margin of safety in unit and in RM. (5 marks)

g) Compute a new break-even point (unit and RM) if BSB decided to increase the selling price by 20% and an increase in additional advertising cost of RM45,000. Explain what is the changes of your new break-even point (unit and RM) with previous break-even point (unit and RM). (7 marks)