Teh Teratai Sdn. Bhd. involved in making and distributing its herbal tea product, HebatinBandar Tengah. Its annual fixed cost is RM162,000, where RM130, 000 is fortheadministration and distribution effort involved in selling the products. The sales manageristargeting a total of 35, 000 boxes would be sold per year. The variable cost for processingisRM2 per box and its variables sales expense is 30 percent of the selling price. There will benoadministrative cost incurred. The management is targeting a profit of RM160, 000 forthecurrent year. (a) Based on the above information, determine the selling price of one box ofHebat. (b) There are several reasons for cost - based approach of a product to become popularandimportant in pricing decision. Discuss these reasons.

Req (a):Let's break-down the given data for better understanding of the scenario-Target profit…

Answered: Teh Teratai Sdn. Bhd. involved in…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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