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Question Queenie Cocoa manufactures nutritious cocoa powder packaged for local market. The product is sold in boxes at RM40 per unit. The cost incurred to
Question Queenie Cocoa manufactures nutritious cocoa powder packaged for local market. The product is sold in boxes at RM40 per unit. The cost incurred to manufacture and market the product follows: COST SCHEDULE Fixed Costs Variable Costs per Box (RM) (RM) Direct materials 12 Manufacturing overhead 300,000 6 Direct labour per unit Selling and 120,000 Administrative 5 Manufacturing overhead 3 Selling and administrative In the first year of its operation, Queenie Cocoa manufactures 50,000 boxes of which 42,000 boxes were sold. Required: (a) Prepare a contribution margin income statement. (4 marks) (b) Calculate Queenie's break-even point in units and ringgit (4 marks) (c) Calculate the units that Queenie must sell to achieve an after-tax profit target of RM210,000? Assume the tax rate is 40%. Indicate the margin of safety in units, at this point. (4 marks) (d) Queenie wishes to incur and additional selling expense of RM35,000, other costs remain constant. Calculate the new break-even point in RM. (3 marks) (e) Break-even analysis is undertaken based on several assumptions. How do these limit the use of the analysis? Explain
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