Question 3Anggur Sdn Bhd produce 3 products, and the material cost per tonne and estimated annualsales for each of the products are:ProductABCMaterial cost per unitRM20.00RM18.00RM15.00Estimated sales2,000 tonnes4,000 tonnes10,000 tonnes++The indirect cost of operating the machinery used to produce all three products isRM300,000 per year. In the past, prices have been set by allocating the indirect costs tothe 3 products EQUALLY. The resulting total costs (material costs plus allocated fixedoverhead) are then marked up by 50 per cent.Required:a) Calculate the allocation of the above fixed costs per tonne for each product.b) Base on part a), calculate cost per tonne, revenue per tonne, and price per tonne usingthe method described for the price settings.c) Compute revenue, contribution margin and profit per tonne and in total for thecompany.d) Discuss the pros and cons of the price settings in this manner, and propose a betterway to set the prices.

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Answered: Question 3 Anggur Sdn Bhd produce 3…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Sales Price Variable Cost Product per Unit per Unit $30 AA $50 BB 35 10 CC 25 15 Their sales mix is reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $253,500 per year. A. What are total variable costs for Morris with their current product mix? Total variable costs $ B. Calculate the number of units of each product that will need to be sold in order for Morris to break even. Number of Units per Product AA BB C. What is their break-even point in sales dollars? Break-even point in sales $ D. Using an income statement format, prove that this is the break-even point. If an amount is zero, enter "0". Income Statement Sales Product AA Product BB Product CC Total Sales Variable Costs Product AA Product BB Product CC Total Variable Costs $ Contribution Margin Fixed Costs Net Income
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