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Question - Colourful Keychain (CK) Sdn Bhd manufactures colourful key chains at a variable cost of RM2.60 each. Fixed costs amounted to RM20,000. The key chains sell for RM4.60 each. For the financial year 2018, CK Sdn Bhd manages to sell 14,000 key chains.
a) Calculate the contribution per unit.
b) Calculate the break-even point (in units & in RM).
c) Calculate the net profit or loss of the business.
d) Assume that CK Sdn Bhd is targeting a profit of RM30,000. Determine the units of key chains required to be sold.
e) Assume that the management of CK Sdn Bhd is considering using cheaper materials which would reduce the variable cost per unit by 10% per key chain but the number of key chains sold will also be reduced by 2%.
i) Determine the new break-even point in units.
ii) Calculate the revised profit.
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