Question
Question (October 2015) ABC Company developed the following information for its products: RM/unit Salse price 60 Variable cost: Direct material cost 12 Direct labor cost
Question (October 2015)
ABC Company developed the following information for its products:
| RM/unit |
Salse price | 60 |
Variable cost: |
|
Direct material cost | 12 |
Direct labor cost | 8 |
Variable factory overhead | 10 |
Variable selling expenses | 5 |
|
|
Total fixed factory overhead | RM150,000 |
Total fixed selling and admin expenses | RM80,000 |
Units sold | 12,000 units |
Required:
(a) Calculate variable cost per unit and total fixed expenses.
(b) Calculate the operating profit for ABC Company using contribution margin income statement.
(c) Calculate the break-even quantity.
(d) If the company plans improve its marketing strategy by paying a marketing agency a fixed amount of RM10,000 a year, how many additional units must be sold to earn the same operating income it is now making? Check your answer by preparing a contribution margin income statement based on the new quantity.
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