Managers often have some latitude in trading off between the variable cost and fixed cost. Provide...

    

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Managers often have some latitude in trading off between the variable cost and fixed cost. Provide your suggestion to the manger in deciding which is the best cost structure. (6 marks) (CLO3, PLO5, C3) c. The Alia B Enteprise operates a chain of wedding's shoe shops that carry many styles. One of the products called Ixora. The following data pertains to Exora: b. Selling price Variable expenses Direct material Direct labour Sales commission Total variable cost Fixed expenses Advertising Rent Salaries Total fixed expenses Per pair RM 120 RM 45 RM 9 RM 18 RM 72 Annual RM 120,000 RM 80,000 RM 400,000 RM 600,000 The company currently sells 11,500 units of its products. Required: i. Calculate the breakeven point in units and in value. ii. Calculate the margin of safety in units and in value. (4 marks) (CLO3, PLO5, C3) (3 marks) (CLO3. PLO5, C3) iii. Calculate the profit if the company is considering paying to the store manager an incentive commission of RM 2 per pair of shoes (in addition to the sales person commission). (4 marks) (CLO3, PLO5, C3) iv. Calculate the new breakeven point in units and value if the company considering eliminating sales commission entirely and increasing the fixed salaries by RM 40,500. Would you recommend that the change be made? **END OF QUESTION** (5 marks) (CLO3, PLO5, C3) Managers often have some latitude in trading off between the variable cost and fixed cost. Provide your suggestion to the manger in deciding which is the best cost structure. (6 marks) (CLO3, PLO5, C3) c. The Alia B Enteprise operates a chain of wedding's shoe shops that carry many styles. One of the products called Ixora. The following data pertains to Exora: b. Selling price Variable expenses Direct material Direct labour Sales commission Total variable cost Fixed expenses Advertising Rent Salaries Total fixed expenses Per pair RM 120 RM 45 RM 9 RM 18 RM 72 Annual RM 120,000 RM 80,000 RM 400,000 RM 600,000 The company currently sells 11,500 units of its products. Required: i. Calculate the breakeven point in units and in value. ii. Calculate the margin of safety in units and in value. (4 marks) (CLO3, PLO5, C3) (3 marks) (CLO3. PLO5, C3) iii. Calculate the profit if the company is considering paying to the store manager an incentive commission of RM 2 per pair of shoes (in addition to the sales person commission). (4 marks) (CLO3, PLO5, C3) iv. Calculate the new breakeven point in units and value if the company considering eliminating sales commission entirely and increasing the fixed salaries by RM 40,500. Would you recommend that the change be made? **END OF QUESTION** (5 marks) (CLO3, PLO5, C3)

Answer rating: 100% (QA)

SOLUTION As a manager I would recommend the following cost structure for the Alia B Enterprise 1 Variable cost structure a Direct material cost RM 45 ... View the full answer