The following is the extract of the Income statement of a Rubber Glove company in Malaysia : STATEMENTS OF COMPREHENSIVE INCOME 2016 2017 2018 2019 2020 Revenue 1,377,931,000 1,529,077,000 2,079,432,000 2,053,916,000 2,314,454,000 Cost of sales -1,150,360,000 -1,155,975,000 -1,640,550,000 -1,818,767,000 -1,851,563,200 Gross profit 227,571,000 373,102,000 438,882,000 235,149,000 462,890,800 Other Income 8,973,000 6,979,000 10,372,000 26,689,000 15,634,000 Selling and distribution expenses -46,520,000 -95,484,000 -66,008,000 -67,121,000 -71,401,000 Administration expenses -46,155,000 -53,091,000 -80,987,000 60,495,000 -178,910,800 Operating Profit 143,869,000 231,506,000 302,259,000 134,222,000 228,213,000 Interest income 0 0 4,288,000 10,573,000 12,340,000 Finance cost -10,151,000 -8,530,000 -639,000 -242,000 -113,000 Share of loss/profit 909,000 -984,000 -947,000 917,000 262,000 Profit before tax 134,627,000 221,992,000 304,961,000 145,470,000 240,702,000 Taxation -26,524,000 -53,922,000 -54,550,000 -30,338,000 -33,417,000 Profit / (Loss) after tax 108,103,000 168,070,000 250,411,000 115,132,000 207,285,000 You are required : Separate the fixed and variable costs of the company Determine the projected Fixed overheads / Operating expenses of the company for 2023 Determine the projected Profit margin of the company’s manufacturing operation
The following is the extract of the Income statement of a Rubber Glove company in Malaysia :
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STATEMENTS OF COMPREHENSIVE INCOME
2016 |
2017 |
2018 |
2019 |
2020 |
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Revenue |
1,377,931,000 |
1,529,077,000 |
2,079,432,000 |
2,053,916,000 |
2,314,454,000 |
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Cost of sales |
-1,150,360,000 |
-1,155,975,000 |
-1,640,550,000 |
-1,818,767,000 |
-1,851,563,200 |
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Gross profit |
227,571,000 |
373,102,000 |
438,882,000 |
235,149,000 |
462,890,800 |
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Other Income |
8,973,000 |
6,979,000 |
10,372,000 |
26,689,000 |
15,634,000 |
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Selling and distribution expenses |
-46,520,000 |
-95,484,000 |
-66,008,000 |
-67,121,000 |
-71,401,000 |
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Administration expenses |
-46,155,000 |
-53,091,000 |
-80,987,000 |
60,495,000 |
-178,910,800 |
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Operating Profit |
143,869,000 |
231,506,000 |
302,259,000 |
134,222,000 |
228,213,000 |
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Interest income |
0 |
0 |
4,288,000 |
10,573,000 |
12,340,000 |
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Finance cost |
-10,151,000 |
-8,530,000 |
-639,000 |
-242,000 |
-113,000 |
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Share of |
909,000 |
-984,000 |
-947,000 |
917,000 |
262,000 |
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Profit before tax |
134,627,000 |
221,992,000 |
304,961,000 |
145,470,000 |
240,702,000 |
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-26,524,000 |
-53,922,000 |
-54,550,000 |
-30,338,000 |
-33,417,000 |
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Profit / (Loss) after tax |
108,103,000 |
168,070,000 |
250,411,000 |
115,132,000 |
207,285,000 |
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You are required :
- Separate the fixed and variable costs of the company
- Determine the projected Fixed
overheads / Operating expenses of the company for 2023 - Determine the projected Profit margin of the company’s manufacturing operation
- Determine the Breakeven point of the company’s manufacturing now ? What is the current level of Safety margin of the company ?
- Determine the Degree of Operating Leverage (DOL) of the company ?
- Determine the degree of Financial Leverage (DOL) of the company ?
- If the company have been selling its rubber glove at an avverage price of RM 0.40 per pair, what could be the lowest price that company could accept for a special order of say 500,000,000 gloves if the company could create the cpacity conveniently without increasing its operating costs ?
- Based on the
average variable costs of manufacturing per pair, could the company consider taking over a manufacturing space / capacity that could produce at RM 0.15 per pair. ?
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