PART B Floor Decor Sdn. Bhd. produces high quality wooden furniture, called Wood Sense. The company's...

 

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PART B Floor Decor Sdn. Bhd. produces high quality wooden furniture, called Wood Sense. The company's 2020 forecast are to sell 40,000 units of a product it makes for RM8 million in revenue. Variable manufacturing cost per unit is RM120. The company's fixed manufacturing cost is RM1,500,000. Fixed selling expenses for the year are estimated to be RM500,000. Required: (iii) Explain how an understanding of the distinction between fixed cost and variable cost can be useful to managers. (iv) Briefly explain how do managers use Cost-Volume-Profit (CVP) analysis to make decisions? PART B Floor Decor Sdn. Bhd. produces high quality wooden furniture, called Wood Sense. The company's 2020 forecast are to sell 40,000 units of a product it makes for RM8 million in revenue. Variable manufacturing cost per unit is RM120. The company's fixed manufacturing cost is RM1,500,000. Fixed selling expenses for the year are estimated to be RM500,000. Required: (iii) Explain how an understanding of the distinction between fixed cost and variable cost can be useful to managers. (iv) Briefly explain how do managers use Cost-Volume-Profit (CVP) analysis to make decisions?