Question 3

Success Sdn Bhd sells lorries. During the current year, 100 lorries were sold resulting in RM820,000 of sales revenue, RM250,000 of variable costs, and RM342,000 of fixed costs.

Required:

Calculate

a. the number of lorries that must be sold to achieve RM300,000 of operating income.

b. the contribution margin at the breakeven point of 2,000 units, variable costs total RM4,000 and fixed costs total RM6,000.

c. Explain the term breakeven point.