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updated please hurry. thank you Question 3 (Total: 10 marks) Melati Bhd produces and sells two distinct products, M2 and M3. For the year ending
updated please hurry. thank you
Question 3 (Total: 10 marks) Melati Bhd produces and sells two distinct products, M2 and M3. For the year ending December 31, 2020, its sales and cost data are: M2 M3 40 Sales volume 20,000 40,000 Selling price per unit RM180 RM160 Direct materials 65 40 Direct labor 40 Variable factory overhead 16 16 Fixed factory overhead 25 25 Full cost per unit RM146 RM121 Gross profit per unit RM 34 RM 39 Other information pertaining to operations during the year ending December 31 2020: (a) Variable selling costs were 5% of sales. (b) Fixed selling and administrative costs were RM207,330 (with a capacity to handle volumes of up to twice those of 2020). (c) The present plant facilities provide a capacity of 60,000 units; this can be increased to a capacity of 100,000 units at an additional cost of RM80,000. (d) The company is taxed at a rate of 40%. Expected changes for the year ending December 31, 2021, include the following: (a) The selling price of M3 is expected to increase by 10% but no other changes are expected in costs or selling prices for either product. (b) The sales mix of 2021 is expected to be in the ratio of 2 units of M2 to 3 units of M3. Required: a) Calculate the number of units of each product the company must sell to earn an after-tax net income of RM135,000 for the year ending December 31, 2021 (7 marks) b) Products M2 and M3 were produced as a result of joint processing. Product M2 could not be sold without additional processing. Even after additional processing, M2 could only be sold with a resultant profit of 5% on total costs Adviso whether production of M2 should be discontinued and whether it is worthwhile to spend on additional processing for M2 before selling (3 marks) - END OF PAPER- 1 Step by Step Solution
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