QUESTION 4 SelfStore Sdn Bhd. manufactures and sells a DIY storage kit. In 2019, it reported...

Transcribed Image Text:

QUESTION 4 SelfStore Sdn Bhd. manufactures and sells a DIY storage kit. In 2019, it reported the following: Units produced and sold Investment Markup percentage on full cost Rate of return on investment Variable cost per unit 3,200 RM2,400,000 8% 12% RM500 (b) SelfStore is considering increasing the annual spending on advertising by RM175,000. The managers believe that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. (7 marks) (c) Refer to the original data. In 2020, SelfStore believes that it will only be able to sell 2,900 units at the price calculated in Requirement (a). Management has identified 5 RM125,000 in fixed cost that can be eliminated. If SelfStore wants to maintain an 8% markup on full cost, what is the target variable cost per unit? (6 marks) QUESTION 4 SelfStore Sdn Bhd. manufactures and sells a DIY storage kit. In 2019, it reported the following: Units produced and sold Investment Markup percentage on full cost Rate of return on investment Variable cost per unit 3,200 RM2,400,000 8% 12% RM500 (b) SelfStore is considering increasing the annual spending on advertising by RM175,000. The managers believe that the investment will translate into a 10% increase in unit sales. Should the company make the investment? Show your calculations. (7 marks) (c) Refer to the original data. In 2020, SelfStore believes that it will only be able to sell 2,900 units at the price calculated in Requirement (a). Management has identified 5 RM125,000 in fixed cost that can be eliminated. If SelfStore wants to maintain an 8% markup on full cost, what is the target variable cost per unit? (6 marks)