Reference no: EM132994903

Question - Kinder Soaps Sdn. Bhd. is planning to launch its new soap, The Main Event, in Malaysia for 2022. Based on the current market condition, the factory plans to produce 20,000 pieces with which the volumes occupy 70% of the existing capacity. The new soap is sold for RM28 each piece. The fixed costs consist of fixed production costs RM180,000 and fixed selling expenses RM45,000. The variable costs consist of direct materials RM5, direct labor RM4, and variable factory overheads RM2, and variable selling expenses RM2. The relevant range is expected between 9,500 and 27,000 pieces.

Required - Mark is rewarded only when there is working for each of your answers.

(i) Calculate the break-even point in units and value.

(ii) Sketch a traditional break-even chart with all relevant labels.

(iii) Calculate the number of pieces of soaps if factory expects to make a profit of RM45,000.

(iv) Calculate the profit that could be expected if the factory operated at 70% of capacity.

(v) Calculate the break-even point in pieces if the total fixed costs increased by 15% and selling price increased by 5%.

(vi) Calculate the margin of safety in units and value if demand reaches the 80% of company's capacity.

(vii) Calculate the expected profit if the factory operates at 100% of capacity.

(viii) If the factory operates at 90% of capacity, fixed production costs decreased by RM12,000, variable costs (in total) is reduced by 5%, profit is expected to be RM60,000, Calculate the new selling price per piece.