Question 1

PART B PLC Sdn Bhd is a manufacturing company that has just commenced operations. The company intends to produce custom made fire proof doors for use in factory buildings and high-rise buildings. The company intends to use target costing for the pricing of its products. The production team has compiled the following data:

1. Expected sales volume 500,000 units per year 2. Production output 10 units per labour hours 3. Direct labor cost RM90.00 per hour 4. Direct material cost RM14.00 per unit of output 5. Variable manufacturing overhead is charged to products on a labour hour basis Rate of RM120 per hour 6. Fixed overhead manufacturing cost allocated to the products is estimated to be: RM2,125,000 7. Estimated selling price per unit RM43.50 8. Target profit margin 20%Present Value of $1.00 S P (1 + r)" In this table S = $1.00. Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 0.980 0.962 0.943 0.926 0.909 0.893 0.877 0.862 0.847 2 0.961 0.925 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.942 0.889 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.924 0.855 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.906 0.822 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.888 0.790 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.871 0.760 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.853 0.731 0.627 0.540 0.467 0.404 0.351 0.305 0.266 LO 0.837 0.703 0.592 0.500 0.424 0.361 0.308 0.263 0.225 10 0.820 0.676 0.558 0.463 0.386 0.322 0.270 0.227 0.191