Question (June 2015)

Zack Company developed the following information for its product:

	RM/unit
Sales price	60
Variable cost:
Direct material cost	12
Direct labor cost	8
Variable factory overhead	10
Variable selling expenses	5
Total fixed factory overhead	150,000
Total fixed selling and admin expenses	80,000
Units sold	12,000 units

Required:

(a) Calculate variable cost per unit and total fixed expenses.

(b) Calculate the operating profit for Zack Company using contribution margin income statement.

(c) Calculate the breakeven unit and check your answer by preparing a contribution margin income statement based on the breakeven units.

(d) How much sales must be generated for the company to earn a profit of RM300,000 ?

(e) If the company plans to hire sales promoter and pay a commission of RM5 for every unit sold, how many additional units must be sold to earn the same operating income it is now making? Check your answer by preparing a conteibution margin income statementbased on the new quantity. , (6 marks)