Safura Health Company manufactures a popular vitamin pill that is sold throughout Malaysia. The company sells an average of 1,000,000 bottles per year. Following is financial information related to the vitamin pills: Selling price per bottle Variable costs per bottle Fixed costs: Salaries Rent on building Advertising Depreciation on equipment Other RM 2.00 0.80 100,000 2026) 50,000 100,000 50,000 120,000 Instructions 1. What are the break-even point (in bottles) of vitamin pills and the percentage of the firm's margin of safety? 2. How many bottles would have to be sold for the company to earn a profit of RM55,000? 3. The marketing vice president believes that an additional advertising expense of RM20,000 would generate a 20% increase in the number of bottles sold. Would you recommend the increased advertising? Show your work clearly. Hints: (a) Break-even point: 350,000 bottles dein 4. Refer to the original problem. The company is considering a change in the production pro- cess, which would decrease the variable cost per bottle by RM0.15 and would increase fixed costs by RM30,000. At a sales level of 600,000 bottles, would you recommend this change? Show your work clearly. aizviens nove di S-

PR 8-7 Safura Health Company manufactures a popular vitamin pill that is sold throughout Malaysia. The company sells an average of 1,000,000 bottles per year. Following is financial information related to the vitamin pills: Instructions 1. What are the break-even point (in bottles) of vitamin pills and the percentage of the firm's margin of safety? 2. How many bottles would have to be sold for the company to earn a profit of RM55,000? 3. The marketing vice president believes that an additional advertising expense of RM20,000 would generate a 20% increase in the number of bottles sold. Would you recommend the increased advertising? Show your work clearly. 4. Refer to the original problem. The company is considering a change in the production process, which would decrease the variable cost per bottle by RM0.15 and would increase fixed costs by RM30,000. At a sales level of 600,000 bottles, would you recommend this change? Show your work clearly. Hints: (a) Break-even point: 350,000 bottles