1. The excerpt statement of comprehensive income for Ahmad Albab PLT for 2020 is shown below:

AHMAD ALBAB PLT

Statement of Comprehensive Income for year ended December 31, 2020

RM

Sales (240,000 units)		1,200,000
Cost of goods sold		800,000
Gross profit		400,000
Operating expenses: Selling	280,000
Administrative	150,000	430,000
Net loss		(30,000)

Management accountant has provided additional information on cost behaviour. Analysis shows that variable cost elements are 75% of the cost of goods sold, 42% of the selling expenses and 40% of the administrative expenses respectively.

Required:

(Note: Round quantity to nearest unit, Ringgit Malaysia to two decimal places and percentage where necessary. Use the CVP income statement format to calculate profits.)

1. Calculate breakeven point in Ringgit Malaysia and in units for year 2020. (6 marks)

2. Abu suggested to the management a plan to reduce losses and make profit. Among them is to improve quality of the product substantially by spending 25 sen more per unit on better raw materials. Due to stiff competition, the company can only increase selling price per unit to only RM5.25. Moreover, he estimates that sales volume will increase by 25%.

From the above suggestions, calculate the effect of the new plan on the profits and the breakeven point in Ringgit Malaysia. (6 marks)

3. Hassan graduated from marketing degree in Faculty of Technology Management and Technopreneurship (FPTT), Universiti Teknikal Malaysia Melaka (UTeM). As a marketer, he strongly believes in the marketing power to increase sales. He proposed an alternative plan to Ahmads:

• increase variable selling expenses to 59 sen per unit,
• lower the selling price per unit by 25 sen, and
• increase fixed selling expenses by RM40,000.

From recent marketing report, Hassan was interested on the statement which said that sales volume would increase by 60% if these changes were made. Considering this plan was executed, calculate new profits and the breakeven point in Ringgit Malaysia of the company. (6 marks)

iv) Which plan should be accepted? Briefly justify your reason.(1 mark)