Question
The Jerry Company produces product X. Each product sells for RM20.00. Unit costs are as follows: RM Direct material 3.90 Direct labour 1.40 Variable factory
The Jerry Company produces product X. Each product sells for RM20.00. Unit costs are as follows: RM Direct material 3.90 Direct labour 1.40 Variable factory overhead 2.10 Variable selling and administrative expenses 1.60 Total fixed factory overhead is RM70,000 per year and total fixed selling and administrative expense is RM100,000. During the recent year, 20,000 units were sold. Required: a) Calculate the variable cost per unit, total fixed cost and the contribution margin per unit. (4 marks) b) Calculate the breakeven point in units and in ringgit. (3 marks) c) Calculate the margin of safety in units for the recent years. (2 marks) d) Prepare Jerrys current year income statement. (3 marks) e) How many units Jerry should sell in order to earn a profit of RM100,000? (3 marks) (Total: 15 Marks)
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