Penfast Electronics Sdn. Bhd. (Penfast) is a manufacturer of high capacity batteries for electronic toll transponders....

    

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Penfast Electronics Sdn. Bhd. (Penfast) is a manufacturer of high capacity batteries for electronic toll transponders. The company has lately been experiencing erratic sales of this sole product. The company's contribution format income statement for the month of March 2016 is as follows: RM Sales (19,500 units x RM30 per unit) Variable expenses Contribution margin Fixed expenses 585,000 409,500 175,500 180,000 Net operating loss (4,500) a. Compute the company's contribution margin ratio and its break-even point in both unit sales and dollar sales. b. The general manager believes that a RM16, 000 increases in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an RM80, 000 increases in monthly sales. If the general manager is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer). c. Refer to the data for Penfast. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of RM60, 000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? d. Refer to the data for Penfast. The marketing manager thinks that a fancy new package for the transponder battery would help improve sales. The new package would increase packaging costs by RM0.75 cents per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of RM9,750 Penfast Electronics Sdn. Bhd. (Penfast) is a manufacturer of high capacity batteries for electronic toll transponders. The company has lately been experiencing erratic sales of this sole product. The company's contribution format income statement for the month of March 2016 is as follows: RM Sales (19,500 units x RM30 per unit) Variable expenses Contribution margin Fixed expenses 585,000 409,500 175,500 180,000 Net operating loss (4,500) a. Compute the company's contribution margin ratio and its break-even point in both unit sales and dollar sales. b. The general manager believes that a RM16, 000 increases in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an RM80, 000 increases in monthly sales. If the general manager is right, what will be the effect on the company's monthly net operating income or loss? (Use the incremental approach in preparing your answer). c. Refer to the data for Penfast. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of RM60, 000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? d. Refer to the data for Penfast. The marketing manager thinks that a fancy new package for the transponder battery would help improve sales. The new package would increase packaging costs by RM0.75 cents per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of RM9,750

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