QUESTION 4

Wirawan Bakery sell bread for dinner to an army camp located in sintok. Wirawan Bakery received RM1.20 for a dozen loaves of bread. The cost to produce 8000 dozen loaves for January 2016 is as follows:

Changes Cost	RM	Fixed Cost	RM
Ingredients	2000	Equipment Depreciation	400
Labour	2500	Rental Expenses	800

Utilities expenses RM600 ( 50% changes cost, 50% fixed cost)

BE REQUIRED:

a) Calculate how many loaves of bread (in dozenO) need to be sold by Wirawan Bakery in February to reach break -even point (in dollars and units)

b) Using the contribution margin, calculate how many loaves (in dozens) need to be sold in February to earn a profit of RM1200 (in ringgit and units)

c) IF WIrawan Bakery expects to sell 12,000 dozen loaves of bread in February, calculate the safety margin for the February operation

d) Explain briefly the difference between variable cost, fixed cost and forgiveness cost