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 SCHEDULEVariable Costs per Box Fixed Costs per Month (RM) (RM)Manufacturing: Manufacturing overhead25,000 Direct materials4 Selling and Administrative110,000 Direct labour per unit8 Total135,000 Manufacturing overhead3 Total15 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:“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.

We first need to understand meaning of break even. Breakeven is a point where no profit/no loss…

Answered: Selasih Company manufactures aluminium…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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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	25,000
Direct materials	4	Selling and Administrative	110,000
Direct labour per unit	8	Total	135,000
Manufacturing overhead	3
Total	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:

“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.

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