Question: PLEASE answer the whole Required clearly and explained so I can read & understand QUESTION THREE (25 MARKS) a) Boon Hock is considering opening a
QUESTION THREE (25 MARKS) a) Boon Hock is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs wl be incurred during his first year of operations: Rent RM9,200, Depreciation on equipment RM7,000, Wages RM16,400, Motor oil RM2.00 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost RM3.00 each. He must also pay The Fast 'n Clean Berhad a franchise fee of RM1.10 per oil change, since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows: Number of Oil Changes 4,000 6,000 9,000 12,000 14,000 Utility Costs RM 6,000 RM 7,300 RM 9,600 RM12,600 RM15,000 Boon Hock anticipates that he can provide the oil change service with a filter at RM25 each. Required (i) Using the high-low method, determine variable costs per unit and total fixed costs. (8 marks) (if) Determine the break-even point in number of oil changes and sales dollars. (8 marks) (ii) Without regard to your answers in parts (a) and (b), determine the oil changes required to earn net income of RM20,000, assuming fixed costs are RM32,000 and the contribution 4 marks) margin per unit is RM8 b) Mercer has three product lines in its retail stores: books, videos, and music. Results of the fourth quarter are presented below: Videos 2,000 Units sold Revenue Variable departmental costs Direct fixed costs Allocated fixed costs Net income (loss) 1,000 5,000 RM20,000 RM40,000 RM25,000 M85,000 51,000 6,000 2,000 17,000 1,000 22,000 3,000 12,000 2,000 RMC5,000) RN 8,000 RM 4,000 RM7.000 The allocated fixed costs are unavoidable. Demand for individual products are not affected by changes in other product lines. Required What will happen to profits if Mercer discontinues the Books product line? Show your
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