Mika Sdn Bhd manufacture vase branded as Flora for local market. The following is the information on production cost and other expenses related to July 2021. Details of cost elements 2000 Units of Vases (RM) Fixed Administration expenses 4,500 Indirect labour 9,500 Power 1,000 Fixed Rental 1,400 Selling and Distribution 6,500 Direct labour 25,000 Factory supplies 2,500 Direct materials 50,000 Total cost 64,200 The averages selling price of the vase is RM50.20 per unit. The maximum capacity of the production is 10,000 vase per month. BEP Variable Cost Amount (RM) Per Unit Indirect Labor 9500 4.75 Power 1000 0.50 Selling and Distribution 6500 3.25 Direct Labor 25000 12.50 Factory Supplies 2500 1.25 Direct Material 50000 25.00 Total Variable Cost 94500 47.25 Fixed Cost Amount (RM) Fixed Rental 1400 Fixed Administration Expenses 4500 Total Fixed Cost 5900 - Break even point (in RM) = BEP Units x Sales Price = 2000 Units x 50.20 = RM 100,400 - Selling Price = (Total Fixed Cost / Production Volume) + Variable Cost per Unit = (5900 / 1500) + 47.25 = 3.93 + 47.25 = RM 51.18 per Unit. Required: Identify the margin of safety (in unit and percentage).
Mika Sdn Bhd manufacture vase branded as Flora for local market. The following is the information on production cost and other expenses related to July 2021.
|
Details of cost elements |
2000 Units of Vases (RM) |
|
Fixed Administration expenses |
4,500 |
|
Indirect labour |
9,500 |
|
Power |
1,000 |
|
Fixed Rental |
1,400 |
|
Selling and Distribution |
6,500 |
|
Direct labour |
25,000 |
|
Factory supplies |
2,500 |
|
Direct materials |
50,000 |
|
Total cost |
64,200 |
The averages selling price of the vase is RM50.20 per unit. The maximum capacity of the production is 10,000 vase per month.
BEP
|
Variable Cost |
Amount (RM) |
Per Unit |
|
Indirect Labor |
9500 |
4.75 |
|
Power |
1000 |
0.50 |
|
Selling and Distribution |
6500 |
3.25 |
|
Direct Labor |
25000 |
12.50 |
|
Factory Supplies |
2500 |
1.25 |
|
Direct Material |
50000 |
25.00 |
|
Total Variable Cost |
94500 |
47.25 |
|
Fixed Cost |
Amount (RM) |
|
|
Fixed Rental |
1400 |
|
|
Fixed Administration Expenses |
4500 |
|
|
Total Fixed Cost |
5900 |
- Break even point (in RM) = BEP Units x Sales Price = 2000 Units x 50.20 = RM 100,400
- Selling Price = (Total Fixed Cost / Production Volume) + Variable Cost per Unit = (5900 / 1500) + 47.25 = 3.93 + 47.25 = RM 51.18 per Unit.
Required:
- Identify the margin of safety (in unit and percentage).
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