Secret Leaf Sdn Bhd is a company specialising in the production of Argan oil-based products that is packed in a bottle. During the month of September 2021, a total of 20,000 bottles were produced and sold. The data given below relates to the month of September 2021:

Selling price per bottleRM25.00

Variable cost per bottle: RM

Direct material 4.00

Direct wages 4.00

Production overhead 3.00

Selling expenses 2.00

For the year 2021, the annual fixed manufacturing overhead and fixed selling and administrative expenses incurred by Secret Leaf Sdn Bhd were RM60,000 and 48,000 respectively.

Required:

i. Explain the following term:

a. Margin of safety.

b. Contribution margin

ii. State FOUR (4) limitations of Cost Volume Profit analysis.

iii. . Calculate the break-even point in units and in RM value.

(4 marks)

(4 marks)

(5 marks)

iv. Calculate the required sales in bottles for Secret Leaf Sdn Bhd if the company plans to earn a net profit of RM255,000 in September 2021.

(3 marks)

v. The following changes are expected in October 2021, due to economic downturn and other uncertainty:

- Direct material costs would increase by 15%.

- Direct wages would increase by 4%.

- Variable production overhead would increase by 2%.

- Variable selling expenses would increase to RM3.00 per bottle.

- Total monthly fixed costs would increase to RM12,000.

- Profit is projected to reach RM250,000.

- Targeted production and sales would increase to 30,000 bottles.

Based on the above changes in October 2021, calculate the companys new selling price per unit.