Week $12-$ CVP Analysis $($Single product$)($BL$)$

Answer all questions

Joyful Sdn Bhd is a manufacturer of sports and gym equipment. The management is reviewing its plans to improve the profitability of the company for the coming year. The budgeted revenues and costs data are as follows:

$\backslash$table$[[$Budgeted volume,$5,000$ units per year$],[,$RM$250],[$Selling price per unit,RM$50],[$Variable Costs per unit:,RM$35],[$Direct material,RM$10],[$Direct wages,$],[$Direct expense,RM$46,000$ per quarter$],[,$RM$12,000$ per month$],[$Fixed manufacturing overheads,RM$53,250$ per annum$],[$Fixed administrative overheads,RM$5$ per unit sold$)],[$Selling and distribution overheads,$($including variable selling expenses$],[,]]$

Required:

a$)$ Calculate the followings:

i$.$ variable cost per unit

ii$.$ contribution per unit

iii. contribution to sales ratio

iv$.$ annual fixed costs

$(6$ marks$)$

b$)$ Compute the annual break$-$even point in units and value.

$(4$ marks$)$

c$)$ Determine the margin of safety in units at the budgeted volume.

$(2$ marks$)$

d$)$ Calculate the annual sales volume required to be achieved if the company targets to earn an annual profit of RM$400,450,$ and there is a $10\%$ increase in variable cost per unit. Assume other costs remain the same.

$(4$ marks$)$

e$)$ Assume that there is an increase in fixed selling and distribution overheads by RM$10,000$ per annum and a reduction of direct wages by $5\%$ while other costs remain the same. Find the selling price per unit that needs to be set if the company wishes to maintain the existing budgeted profit.

$(4$ marks$)$

$($Total: $20$ marks$)$