Syarikat Koko Bestari just completed its first year as a cocoa based beverage manfucturer called Great

Cocoa (GC). Each box of CG is sold at the price RM40 and the costs involved in producing and

marketing the product are as follows:

During the first year operation, the Company manufactured 50,000 boxes of CG and sold 42,000 boxes.

Required:

a) Calculate the cost per box of CG using the following methods:

i) Absorption costing.

ii) Marginal costing.

b) Preparet the income statement for the first year of Syarikat Koko Bestari using the following methods:

i) Absorption costing.

ii) Marginal costing .

c) Explain why there is a difference in the net income figures reported in both methods. Support your explanation with calculation.

d) Based on marginal income statement prepared (b)(ii) above:

i) Determine the break-event points in unit and ringgit.

ii) How much sales need to gnerated to achieve the targeted profit of RM210,000 net profit after

tax. Assumed the tax rate is 40%.

iii) Calculate the safety margin in ringgit.

iv) The company plans to increase the fixed advertising expenditure by RM40,000 as it expects to

increase sales by 3,000 units. What the impact of this pelan on the Companys profitability.

Should the Company continue to do so?

v) Calculate the operating leverage. If the sales increased by 20%, what would be the estimated increase in profit.

\begin{tabular}{|l|c|} \hline Costs & RM \\ \hline Per unit: & \\ Direct material & 12 \\ Direct labour & 6 \\ Variable manufacturing overhed & 5 \\ Variable sales and administrative & 3 \\ \hline Fixed manufacturing overhed & 300,000 \\ Sales and administrative expenses & 120,000 \\ \hline \end{tabular}