Pottery Pots sells flower vases, Chantiq which is sold at RM85 per unit. During the month...

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Pottery Pots sells flower vases, Chantiq which is sold at RM85 per unit. During the month of January 2008, a total of 2,500 units of Chantiq have been produced and sold. Below is the cost information for that particular month: Variable cost per unit Fixed costs per month: Depreciation of packaging machine Rental of building Workers' salaries Electricity RM 5.00 b) Calculate the following for Chantiq in units and RM: i) break even point; and ii) margin of safety. 16,500 30,000 58,000 45,500 Based on the above information, you are required to answer the following questions: a) Explain the meaning of contribution margin and determine the contribution margin per unit for Chantiq. (2) c) The management of Pottery Pots plans to achieve a target profit of RM50,000 for the month of February 2008. Determine the total units of Chantiq that need to be sold in order to achieve the management's target. (2) d) The marketing manager proposed to make an advertising campaign that costs RM7,500. If the proposal is accepted by the management, the company estimated that the variable cost per unit will increase by 25%. Calculate the new break even point for Chantiq in units and RM. (6) e) Explain how cost-volume-profit analysis can assist the management in making decision. (3) Pottery Pots sells flower vases, Chantiq which is sold at RM85 per unit. During the month of January 2008, a total of 2,500 units of Chantiq have been produced and sold. Below is the cost information for that particular month: Variable cost per unit Fixed costs per month: Depreciation of packaging machine Rental of building Workers' salaries Electricity RM 5.00 b) Calculate the following for Chantiq in units and RM: i) break even point; and ii) margin of safety. 16,500 30,000 58,000 45,500 Based on the above information, you are required to answer the following questions: a) Explain the meaning of contribution margin and determine the contribution margin per unit for Chantiq. (2) c) The management of Pottery Pots plans to achieve a target profit of RM50,000 for the month of February 2008. Determine the total units of Chantiq that need to be sold in order to achieve the management's target. (2) d) The marketing manager proposed to make an advertising campaign that costs RM7,500. If the proposal is accepted by the management, the company estimated that the variable cost per unit will increase by 25%. Calculate the new break even point for Chantiq in units and RM. (6) e) Explain how cost-volume-profit analysis can assist the management in making decision. (3)

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Answer a The contribution margin is the difference between the selling price of a product and the variable costs associated with producing that produc... View the full answer