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COST VOLUME PROFIT ANALYSIS

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Published by safwanah pmk, 2019-08-23 01:24:25

ANSWER 5

COST VOLUME PROFIT ANALYSIS

Keywords: ANS Q5

CHAPTER 5 : COST VOLUME PROFIT
ANALYSIS_ANSWER

(a) Equation techniques

⛄ SP = RM875,000 / 35,000 u

= RM25.00 per unit

⛄ VC = RM700,000 / 35,000 u
= RM20.00 per unit

⛄ FC = RM100,000 + RM100,000
= RM200,000

BEP (unit) = Sales – VC – FC
0 = RM25u – RM20u – RM200,000
= RM5u
RM200,000 = 40,000 unit
BEP unit

(b) CMR = (CM / Sales) x 100%
BEP (RM) = [RM175,000 / RM875,000] x 100%
= 20%

= FC / CMR
= RM200,000 / 0.2
= RM1,000,000

(c) Sales Manager’s proposal

Sales (units) = [FC + Target Profit] / CM

40,000 u = [RM300,000 + profit] / [RM30 – RM20]

40,000 u = [RM300,000 + profit] / RM10

Profit = RM400,000 – RM300,000

= RM100,000

Current loss = (RM25,000)
RM100,000
New profit =
RM125,000
Increase in profit

Decision : Accept the proposal from Sales Manager.

(d) Salesperson’s proposal

Sales (units) = [FC + Target Profit] / CM

40,500 u = [RM310,000 + profit] / [RM30 – RM23]

40,500 u = [RM310,000 + profit] / RM7

= RM283,500 – RM310,000

Loss = (RM26,500)

Current loss = (RM25,000)
New loss = (RM26,500)

Increase in loss RM1,500

Decision : Reject the proposal from Salesperson.

(e) Margin of Safety  excess of budgeted or actual sales over the BEP sales.


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