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 isthe data for the current year 2021, for use in next year's cam paign. COST SCHEDULE Variable Costs per Box Fixed Costs per Month (RM) 25,000 (RM) Manufacturing: Direct materials Manufacturing overhead Selling and Administrative Total 4 110,000 Direct labour per unit Manufacturing overhead Total 8 135.000 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 rem aining constant. What will be the break-even point in RM salesfor 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 isthe data for the current year 2021, for use in next year's cam paign. COST SCHEDULE Variable Costs per Box Fixed Costs per Month (RM) 25,000 (RM) Manufacturing: Direct materials Manufacturing overhead Selling and Administrative Total 4 110,000 Direct labour per unit Manufacturing overhead Total 8 135.000 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 rem aining constant. What will be the break-even point in RM salesfor 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
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Question 2
Please assist on sub-part c, d in details.
Transcribed Image Text:Question
Selasih Com pany manufactures aluminium containers for restaurants. The owner of Selasih, Puan Atiqah,
believes that an aggressive cam paign is needed next year due to the Malaysian local market's uncertain
conditions. Presented below isthe data for the current year 2021, for use in next year's cam paign.
COST SCHEDULE
Variable Costs per Box
Fixed Costs per Month
(RM)
(RM)
Manufacturing:
Manufacturing overhead
Selling and Administrative
25,000
Direct materials
110,000
Direct labour per unit
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:
a) Prepare a contribution margin income statem ent 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 managem ent because a company cannot survive by just
breaking even." Do you agree with the statement? Explain.
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