A company manufactures a single product. Budget and standard cost details for next year include:

Selling price per unit RM26.00

Variable production cost per unit RM5.80

Fixed production costs RM150,000

Fixed selling and distribution costs RM105,000

Sales commission 5% of selling price

Sales 85,000 units

Required:

(i) Calculate the break-even point in units

(ii) The marketing manager has suggested that the selling price per unit can be increased to RM21.00 if the sales commission is increased to 6% of selling price and a further RM35,000 is spent on distribution. Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss the revised break-even point based on the marketing manager’s suggestion.

Answer rating: 100% (QA)

1 The break even point is the amount either in units or in sales value wherein net income is equal t... View the full answer