OBJECTIVE: To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and...

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OBJECTIVE: To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and cost-effective actions related to the products or services the business sells. REQUIREMENT: Cost Volume profit analysis Task 3 (CLO2) Question Queenie Cocoa produces nutritious cocoa powder that is packaged for the local market. The product is available in boxes for RM40 per unit. The costs of manufacturing and marketing th product are as follows: COST SCHEDULE Variable Costs per Box (RM) Direct materials 12 Fixed Costs per Year Manufacturing overhead (RM) 300,000 Direct labour per unit 6 Selling and Administrative 120,000 Manufacturing overhead 5 Selling and administrative 3 In the first year of its operation, Queenie Cocoa produces 50,000 boxes of which 42,000 boxes were sold. Required: a) Prepare a contribution margin income statement. (4 marks) b) Calculate Queenie's break-even point in units and ringgit (4 marks) c) Calculate the units that Queenie must sell to achieve an after-tax profit target of RM210,000? Assume the tax rate is 40%. Indicate the margin of safety in units, at this point. (4 marks) d) Queenie wishes to incur an additional selling expense of RM35,000, other costs remain constant. Calculate the new break-even point in RM. (3 marks) e) Break-even analysis is undertaken based on several assumptions. How do these limit the use of the analysis? Explain. (2 marks) (Total: 17 marks) OBJECTIVE: To enable learners to utilise the Cost Volume Profit analysis in making informed decisions and cost-effective actions related to the products or services the business sells. REQUIREMENT: Cost Volume profit analysis Task 3 (CLO2) Question Queenie Cocoa produces nutritious cocoa powder that is packaged for the local market. The product is available in boxes for RM40 per unit. The costs of manufacturing and marketing th product are as follows: COST SCHEDULE Variable Costs per Box (RM) Direct materials 12 Fixed Costs per Year Manufacturing overhead (RM) 300,000 Direct labour per unit 6 Selling and Administrative 120,000 Manufacturing overhead 5 Selling and administrative 3 In the first year of its operation, Queenie Cocoa produces 50,000 boxes of which 42,000 boxes were sold. Required: a) Prepare a contribution margin income statement. (4 marks) b) Calculate Queenie's break-even point in units and ringgit (4 marks) c) Calculate the units that Queenie must sell to achieve an after-tax profit target of RM210,000? Assume the tax rate is 40%. Indicate the margin of safety in units, at this point. (4 marks) d) Queenie wishes to incur an additional selling expense of RM35,000, other costs remain constant. Calculate the new break-even point in RM. (3 marks) e) Break-even analysis is undertaken based on several assumptions. How do these limit the use of the analysis? Explain. (2 marks) (Total: 17 marks)