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:
Table - Selling Price and Expense Data For Deskjet Company
|
Items
|
RM
|
Selling price per product
|
100
|
Variable expenses per product:
|
|
Invoice cost
|
50
|
Sales commission
|
20
|
Total variable expenses
|
70
|
Annual fixed expenses:
|
|
Rent
|
55,000
|
Marketing
|
68,000
|
Salaries
|
100,000
|
Total fixed expenses
|
318,000
|
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.