Kampari IT Sdn. Bhd. (KI) is a Malaysian exporter of refurbished computers to Singapore. It periodically...

 

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Kampari IT Sdn. Bhd. (KI) is a Malaysian exporter of refurbished computers to Singapore. It periodically reviews its pricing policy because of concerns that the exchange rate between MYR and SGD may affect their sales. At the end of each year, KI is able to sell around 600 desktops at the SGD equivalent of MYR450 per desktop. Currently, the spot rate is SGD0.32/MYR. Direct costs are 60% of the Malaysia's sales price. Some of local economists have forecasted that the SGD will depreciate next month to SGD0.41/MYR and it will remain constant for at least 2 years. In response to that prediction, KI is considering 2 pricing policies in preparation for the impact of SGD depreciation on its profit margins as follows: Plan I: Maintain the same SGD price Sales volume will increase at 10% per annum in Year 2. Plan II: Raise the SGD sales price so as to maintain its MYR price Sales volume will drop at 5% per annum starting from Year 1. Calculate the gross profit in MYR at the end of Year 1 and Year 2 for both (19 marks) policy plans. Which plan should KI choose? (Total: 30 marks] Kampari IT Sdn. Bhd. (KI) is a Malaysian exporter of refurbished computers to Singapore. It periodically reviews its pricing policy because of concerns that the exchange rate between MYR and SGD may affect their sales. At the end of each year, KI is able to sell around 600 desktops at the SGD equivalent of MYR450 per desktop. Currently, the spot rate is SGD0.32/MYR. Direct costs are 60% of the Malaysia's sales price. Some of local economists have forecasted that the SGD will depreciate next month to SGD0.41/MYR and it will remain constant for at least 2 years. In response to that prediction, KI is considering 2 pricing policies in preparation for the impact of SGD depreciation on its profit margins as follows: Plan I: Maintain the same SGD price Sales volume will increase at 10% per annum in Year 2. Plan II: Raise the SGD sales price so as to maintain its MYR price Sales volume will drop at 5% per annum starting from Year 1. Calculate the gross profit in MYR at the end of Year 1 and Year 2 for both (19 marks) policy plans. Which plan should KI choose? (Total: 30 marks]

Answer rating: 100% (QA)

To calculate the gross profit in MYR at the end of Year 1 and Year 2 for both policy plans we need t... View the full answer