Question
The following is the extract of the Income statement of a Rubber Glove company in Malaysia : STATEMENTS OF COMPREHENSIVE INCOME 2016 2017 2018 2019
The following is the extract of the Income statement of a Rubber Glove company in Malaysia :
STATEMENTS OF COMPREHENSIVE INCOME
2016
2017
2018
2019
2020
Revenue
1,377,931,000
1,529,077,000
2,079,432,000
2,053,916,000
2,314,454,000
Cost of sales
-1,150,360,000
-1,155,975,000
-1,640,550,000
-1,818,767,000
-1,929,412,000
Gross profit
227,571,000
373,102,000
438,882,000
235,149,000
385,042,000
Other Income
8,973,000
6,979,000
10,372,000
26,689,000
15,634,000
Selling and distribution expenses
-46,520,000
-95,484,000
-66,008,000
-67,121,000
-71,401,000
Administration expenses
-46,155,000
-53,091,000
-80,987,000
-60,495,000
-101,062,000
Operating Profit
143,869,000
231,506,000
302,259,000
134,222,000
228,213,000
Interest income
0
0
4,288,000
10,573,000
12,340,000
Finance cost
-10,151,000
-8,530,000
-639,000
-242,000
-113,000
Share of loss/profit
909,000
-984,000
-947,000
917,000
262,000
Profit before tax
134,627,000
221,992,000
304,961,000
145,470,000
240,702,000
Taxation
-26,524,000
-53,922,000
-54,550,000
-30,338,000
-33,417,000
Profit / (Loss) after tax
108,103,000
168,070,000
250,411,000
115,132,000
207,285,000
You are required :
1.Separate the fixed and variable costs of the company
2.Determine the projected Fixed overheads / Operating expenses of the company for 2023
3.Determine the projected Profit margin of the company's manufacturing operation
4.Determine the Breakeven point of the company's manufacturing now ? What is the current level of Safety margin of the company ?
5.Determine the Degree of Operating Leverage(DOL) of the company ?
6.Determine the degree of Financial Leverage (DOL) of the company ?
7.If the company have been selling its rubber glove at an avverage price of RM 0.40 per pair, what could be the lowest price that company could accept for a special order of say 500,000,000 gloves if the company could create the cpacity conveniently without increasing its operating costs ?
8.Based on the average variable costs of manufacturing per pair, could the company consider taking over a manufacturing space / capacity that could produce at RM 0.15 per pair. ?
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Educational Foundations
Authors: Leslie Kaplan, James D Stice, William Owings
2nd Edition
1285968298, 9781285968292
