Subject management accounting

Tam Tam Sdn Bhd has established their business for almost 35 years. In fact, the company is one of the key players in manufacturing industry. However, it is not a technology-driven company. The factory equipment they have are the same one used from inception of the business. As one of their focus is to provide job for the community, there's heavy reliance on manpower. Due to aged equipment, they projected to run the factory at a minimum of 50% capacity and a maximum of 70% capacity. The following are information made available for their budgeting activities. At 50% capacity At 60% capacity Production unit 12,500 15,000 RM RM Variable Cost Material 5,000 6,000 Labour 15,000 18,000 Semi-Variable Cost Electricity 32,875 35,000 Maintenance 2,850 3,000 Fixed Cost Depreciation 16,500 16,500 Insurance 4,500 4,500 Salaries 15,000 15,000 Utilities 14,000 14,000 Total Cost 105,725 1 12,000 Profit in any year is budgeted to be 20% of total cost