Orang Kampung Sdn Bhd is the exclusive wholesale distributor of Hazelnut Coffee manufactured in one of the
Question:
Orang Kampung Sdn Bhd is the exclusive wholesale distributor of ‘Hazelnut Coffee’ manufactured in one of the industrial areas in Senawang. The coffee is sold in individual packet of 300 grams at RM6 each. In developing the company’s business strategy for the year 2016, the company’s management accountant has projected the following details:
Expected sales volume 300,000 packets per annum
Variable cost:
Cost of coffee RM2.00 per packet
Cost of labour RM1.00 per packet
Selling and distribution RM0.50 per packet
Administrative expenses RM150,000 per annum
Other overhead expenses RM90,000 per annum
Additional information:
10% of the administrative expenses are variable costs and the remaining are fixed costs.
50% of the other overhead expenses are fixed costs and the remaining are variable costs.
Required:
a. State TWO (2) limitations of Cost-Volume-Profit analysis.
b. Calculate the followings:
Break-even point (BEP) in units and value
Total net profit for the year
Margin of safety (MOS) in units
c. List down THREE (3) assumptions of break-even analysis.
Expert Answer:
a Limitations of CostVolumeProfit analysis Assumption of constant cost per unit The cost per unit is ... View the full answer
