Reference no: EM133145594

Question - The following information relates to Maju Sdn. Bhd.

RM

Fixed costs per annum 60,000

Selling price per unit 20

Direct material cost per unit 3

Direct labour cost per unit 3

Variable overhead cost per unit 4

The company currently sells 8,000 units of its product.

Required - The questions below should be answered independently:

a) Determine the number of sales units that the company has to sell in order to break even.

b) Calculate the current profit of the company.

c) Advise the manager on how many units must be sold to obtain RM30,000 profit.

d) Due to an economic slowdown, sales volume is expected to reduce by 2,000 units. Therefore, the marketing manager decided to reduce the advertising expenses by RM10,000. The production manager decided to use a cheaper material which the price is 10% lower than before. What is the profit obtained?

e) The company decided to pay their salesmen based on units sold i.e. RM2.50 for each unit rather than the fixed amount of RM12,000. What is the new break-even point (in value and in units?)

f) How many additional units must be sold to meet an increase in machinery rental by RM8,000 per annum without any change in the current profit.