Selasih Company manufactures aluminium containers for restaurants. The owner of Selasih, Puan Atiqah, believes that an aggressive campaign is needed next year due to the Malaysian local market's uncertain conditions. Presented below is the data for the current year 2021, for use in next year's campaign. COST SCHEDULE Variable Costs per Box Fixed Costs per Month (RM) (RM) Manufacturing: Manufacturing overhead Selling and Administrative 25,000 Direct materials 4. 110,000 135,000 Direct labour per unit Manufacturing overhead Total 8 Total 3 15 Puan Atiqah has set the sales target for the year 2022 at a level of RM550,000 (22,000 units of containers), or ten percent more than the sales in the year 2021. The selling price of the container is RM25 each, for both years. Required: a) Prepare a contribution margin income statement for the year 2021. b) Calculate Selasih's break-even point in units and ringgit for the year 2021 c) PuanAtiqah believes that to attain the sales in 2022; the company must incur an additional selling expense of RM10,000 for advertising in 2022, with all other costs remaining constant. What will be the break-even point in RM sales for 2022 if the company spends the additional RM10,000? d) "Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with the statement? Explain.
Selasih Company manufactures aluminium containers for restaurants. The owner of Selasih, Puan Atiqah, believes that an aggressive campaign is needed next year due to the Malaysian local market's uncertain conditions. Presented below is the data for the current year 2021, for use in next year's campaign. COST SCHEDULE Variable Costs per Box Fixed Costs per Month (RM) (RM) Manufacturing: Manufacturing overhead Selling and Administrative 25,000 Direct materials 4. 110,000 135,000 Direct labour per unit Manufacturing overhead Total 8 Total 3 15 Puan Atiqah has set the sales target for the year 2022 at a level of RM550,000 (22,000 units of containers), or ten percent more than the sales in the year 2021. The selling price of the container is RM25 each, for both years. Required: a) Prepare a contribution margin income statement for the year 2021. b) Calculate Selasih's break-even point in units and ringgit for the year 2021 c) PuanAtiqah believes that to attain the sales in 2022; the company must incur an additional selling expense of RM10,000 for advertising in 2022, with all other costs remaining constant. What will be the break-even point in RM sales for 2022 if the company spends the additional RM10,000? d) "Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with the statement? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Selasih Company manufactures aluminium containers for restaurants. The owner of Selasih, Puan Atiqah,
believes that an aggressive campaign is needed next year due to the Malaysian local market's uncertain
conditions. Presented below is the data for the current year 2021, for use in next year's campaign.
COST SCHEDULE
Variable Costs per Box
Fixed Costs per Month
(RM)
(RM)
25,000
Manufacturing overhead
Selling and Administrative
Manufacturing:
Direct materials
110,000
135,000
4
Direct labour per unit
Manufacturing overhead
Total
8
Total
3
15
Puan Atiqah has set the sales target for the year 2022 at a level of RM550,000 (22,000 units of containers),
or ten percent more than the sales in the year 2021. The selling price of the container is RM25 each, for both
years.
Required:
a) Prepare a contribution margin income statement for the year 2021.
b) Calculate Selasih's break-even point in units and ringgit for the year 2021
c) PuanAtiqah believes that to attain the sales in 2022; the company must incur an additional selling
expense of RM10,000 for advertising in 2022, with all other costs remaining constant. What will be
the break-even point in RM sales for 2022 if the company spends the additional RM10,000?
d) "Break-even analysis is of limited use to management because a company cannot survive by just
breaking even." Do you agree with the statement? Explain.
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education