Reference no: EM132622946
Problem - Deskjet Company sells car safety products in Kuala Lumpur. The company's salespersons are paid basic salary plus a commission of RM 20 on each sale made by them. The selling price and expenses data as per Table:
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Table - Selling Price and Expense Data For Deskjet Company
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Items
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RM
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Selling price per product
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100
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Variable expenses per product:
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Invoice cost
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50
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Sales commission
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20
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Total variable expenses
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70
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Annual fixed expenses:
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Rent
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55,000
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Marketing
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68,000
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Salaries
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100,000
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Total fixed expenses
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318,000
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Required -
(a) Determine the break-even point in units and RM.
(b) Based on your calculations in (a), illustrate a Cost-Volume-Profit graph.
(c) Calculate the net operating income if the company sells 20,000 car safety products in a year.
(d) Determine the break-even point in units and RM, if commission is entirely eliminated and salaries are increased by RM70,000.
(e) Compute the break-even point in units and RM, if the salesperson is paid an additional commission of RM10 on top of the pre-existing commission.
(f) As an alternative to Q2(c), Deskjet Company is planning to pay RM10 commission to the manager on each product sold in excess of break-even point.
Calculate the effect of these changes on the net operating income or loss of the Deskjet Company if 30,000 products are sold in a year.