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Task 1c (CLO2) OBJECTIVE: To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and cost-effective actions related to the products
Task 1c (CLO2) OBJECTIVE: To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and cost-effective actions related to the products or services the business sells. REQUIREMENT: Cost Volume profit analysis Question Dalila Manufacturing Berhad (DMB) is suffering from the global economic effects for its main product. The product is sold in supermarkets throughout Malaysia. The following table shows the results of DMB's operations for 2021. Required: (a) Compute DMB's breakeven point in both units and $. (2 marks) (b) What would be the required sales, in units and in $, to generate a pretax profit of $30,000 ? (3 marks) (c) Assume an income tax rate of 30%, what would be the required sales volume in both units and $. 4 (3 marks) (d) Prepare a contribution income statement showing the pretax and after tax income as per the requirement above. (4 marks) (e) The manager believes that a $60,000 increase in advertising would result in approximately a $200,000 increase in annual sales. If the manager is right, what will the effect on the company's operating profit or loss? (4 marks) (f) Refer to the original data. The vice president in charge of sales feels that a 10% reduction in price in combination with a $40,000 increase in advertising will cause unit sales to increase by 25%. What effect would this strategy have on operating profit (loss)? (6 marks)
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