Q2. (a) The costs per unit for Starlight Sdn Bhd are as following: Direct material Direct...

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Q2. (a) The costs per unit for Starlight Sdn Bhd are as following: Direct material Direct labour Manufacturing Overhead: Variable Fixed Other Fixed Costs: Selling and distribution Administrative expenses RM 5.50 8.00 2.50 3.00 2.80 2.20 Selling price is RM30 per unit and annual production is 315,000 units. During the year, two enquiries were made at the same time which would result in extra production being necessary. They were: Option 1: An existing customer has requested extra 50,000 units at the price of RM25 per unit. The extra costs affected are the variable costs. Option2: A new customer requested 100,000 units at the price of RM20 each. By accepting the offer, direct material costs will reduce by 5 sen per unit, and the production workers will need to work overtime. Overtime direct labour is RM14 per unit. Distribution cost will increase by RM160,000. (i) Taking each enquiry independently, compile a profit statement showing clearly the net profit and contribution per unit in each case for the: (1) original budget (2) option 1 (3) option 2 (ii) (6 marks) (6 marks) (6 marks) Advise the management of Starlight Sdn Bhd whether to accept or reject these offers. Provide your reasons. (4 marks) Q2. (a) The costs per unit for Starlight Sdn Bhd are as following: Direct material Direct labour Manufacturing Overhead: Variable Fixed Other Fixed Costs: Selling and distribution Administrative expenses RM 5.50 8.00 2.50 3.00 2.80 2.20 Selling price is RM30 per unit and annual production is 315,000 units. During the year, two enquiries were made at the same time which would result in extra production being necessary. They were: Option 1: An existing customer has requested extra 50,000 units at the price of RM25 per unit. The extra costs affected are the variable costs. Option2: A new customer requested 100,000 units at the price of RM20 each. By accepting the offer, direct material costs will reduce by 5 sen per unit, and the production workers will need to work overtime. Overtime direct labour is RM14 per unit. Distribution cost will increase by RM160,000. (i) Taking each enquiry independently, compile a profit statement showing clearly the net profit and contribution per unit in each case for the: (1) original budget (2) option 1 (3) option 2 (ii) (6 marks) (6 marks) (6 marks) Advise the management of Starlight Sdn Bhd whether to accept or reject these offers. Provide your reasons. (4 marks)