QUESTION 4 Part A Magical Toys Sdn. Bhd. sales slumped badly in 2018 due to so many people purchasing gifts online. The company's income statement showed the following results from selling 500,000 units of toys: net sales RM2,125,000; total costs and expenses RM2,500,000; and net loss RM375,000. Costs and expenses consist of the following: Cost of goods sold Selling expenses Administrative expenses Total Total (RM) 2,000,000 200,000 300,000 2,500,000 Variable (RM) 1,300,000 50,000 150,000 1,500,000 Fixed (RM) 700,000 150,000 150,000 1,000,000 For the year 2019, the management of Magical Toys is considering to purchase a new automated equipment. By operating this new equipment, the company is going to change the proportion between variable and fixed expenses to 45%:55%. Required: (a) Compute contribution margin and contribution margin ratio for the year 2018. (3 marks) (b) Compute break even sales for the year 2018. (1 marks) (c) Should the management decide to proceed with its plan, compute the break-even sales for 2019. (6 marks) Part B The budget components for Pitanga Company for the quarter ended June 30 appear below. Pitanga sells trash cans for RM12 each. Budgeted sales and production for the next three months are: Sales Production April 20,000 units 26,000 units May 50,000 units 46,000 units June 30,000 units 29,000 units Pitanga desires to have trash cans on hand at the end of each month equal to 20 percent of the following month's budgeted sales in units. On March 31, Pitanga had 4,000 completed units on hand. Five pounds of plastic are required for each trash can. At the end of each month, Pitanga desires to have 10 percent of the following month's production material needs on hand. At March 31, Pitanga had 13,000 pounds of plastic on hand. The materials used in production cost RM0.60 per pound. Each trash can produced requires 0.10 hours of direct labor Required: Prepare direct materials budget and demonstrate how much the materials purchases will be for the month ending April 30. (10 marks)