Question 1 Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of...

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Question 1 Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cost per unit of direct labor on January 1 of next year. He expects all other costs and expenses to remain unchanged. Wilson has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year. You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semi-variable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 1,000 units. Current plant capacity is 20,000 units. Below are the current-year data assembled for your analysis: Sales price per unit RM RM 100 Variable cost per unit Direct materials 10 Direct labour 20 Manufacturing overhead and selling & administration expenses 30 60 Contribution margin per unit 40 Fixed costs 390,000 Required (a) In anticipation of 15 percent increase of direct labor cost next year, evaluate the appropriate PRICING strategy that the Mr Wilson need to implement in order to maintain the current contribution margin ratio of 40 percent. (b) If however, the sales price is to be remained at current RM100 level and the 15 percent wage increase will still goes into effect, assess the sales volume the company need to achieve in order to maintain the current operating income of RM350,000. (c) Wilson believes that an additional RM700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of RM100 per unit and the wage increase goes into effect, compare and contrast the profitability of the company before and after the production capacity has been increased by constructing proforma income statement. Question 4 Kasih Sayang Sdn Bhd Statement of profit or loss for the year ending 31 December 2018 RM Gross profit RM 155,030 Add Reduction in allowance for doubtful debt 200 200 155,230 Less expenses Wages & salaries 61,400 General trading expenses 15,200 Equipment running cost 8,140 Motor vehicle expenses 6,390 Depreciation: Motor vehicles 5,200 Depreciation: Equipment 6,300 Loss on sale of equipment 1,600 104,230 51,000 Statement of Financial Position as at 31 December 2018 RM 2017 2018 RM RM RM Non-current Assets Equipment at cost 40,400 30,800 Less Depreciation to date 24,600 15,800 -20,600 10,200 Motor vehicles at cost 28,300 28,300 Less Depreciation to date -9,200 19,100 -14,400 13,900 34,900 24,100 Current Assets Inventory 41,700 Accounts receivable less allowance Bank 21,200 44,600 19,800 12,600 75,500 28,100 92,500 Total assets 110,400 116,600 Current liabilities Accounts payable 14,300 17,500 Non-current liabilities Loan from Encik Yussof 20,000 34,300 10,000 27,500 Capital Opening balance b/d 65,600 Add Net profit 42,500 76,100 51,000 Less Drawings 32,000 76,100 -38,000 89,100 Total equity and liabilities 110,400 116,600 Additional information: Accounts receivable 2017 RM22,100 less allowance RM900 Accounts receivable 2018 RM20,500 less allowance RM700 Equipment was sold for RM15,800 during 2018. Equipment costing RM18,100 was purchased during the year. Required: (a) Construct a statement of cash flows for Kasih Sayang Sdn Bhd for the year ending 31 December 2018, using indirect methods and according to the IAS 7 layout. (b) Critically evaluate the benefit of IAS 7/FRS 102 Cash Flow Statement from the perspective of relevant stakeholders L Question 1 Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cost per unit of direct labor on January 1 of next year. He expects all other costs and expenses to remain unchanged. Wilson has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year. You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semi-variable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 1,000 units. Current plant capacity is 20,000 units. Below are the current-year data assembled for your analysis: Sales price per unit RM RM 100 Variable cost per unit Direct materials 10 Direct labour 20 Manufacturing overhead and selling & administration expenses 30 60 Contribution margin per unit 40 Fixed costs 390,000 Required (a) In anticipation of 15 percent increase of direct labor cost next year, evaluate the appropriate PRICING strategy that the Mr Wilson need to implement in order to maintain the current contribution margin ratio of 40 percent. (b) If however, the sales price is to be remained at current RM100 level and the 15 percent wage increase will still goes into effect, assess the sales volume the company need to achieve in order to maintain the current operating income of RM350,000. (c) Wilson believes that an additional RM700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of RM100 per unit and the wage increase goes into effect, compare and contrast the profitability of the company before and after the production capacity has been increased by constructing proforma income statement. Question 4 Kasih Sayang Sdn Bhd Statement of profit or loss for the year ending 31 December 2018 RM Gross profit RM 155,030 Add Reduction in allowance for doubtful debt 200 200 155,230 Less expenses Wages & salaries 61,400 General trading expenses 15,200 Equipment running cost 8,140 Motor vehicle expenses 6,390 Depreciation: Motor vehicles 5,200 Depreciation: Equipment 6,300 Loss on sale of equipment 1,600 104,230 51,000 Statement of Financial Position as at 31 December 2018 RM 2017 2018 RM RM RM Non-current Assets Equipment at cost 40,400 30,800 Less Depreciation to date 24,600 15,800 -20,600 10,200 Motor vehicles at cost 28,300 28,300 Less Depreciation to date -9,200 19,100 -14,400 13,900 34,900 24,100 Current Assets Inventory 41,700 Accounts receivable less allowance Bank 21,200 44,600 19,800 12,600 75,500 28,100 92,500 Total assets 110,400 116,600 Current liabilities Accounts payable 14,300 17,500 Non-current liabilities Loan from Encik Yussof 20,000 34,300 10,000 27,500 Capital Opening balance b/d 65,600 Add Net profit 42,500 76,100 51,000 Less Drawings 32,000 76,100 -38,000 89,100 Total equity and liabilities 110,400 116,600 Additional information: Accounts receivable 2017 RM22,100 less allowance RM900 Accounts receivable 2018 RM20,500 less allowance RM700 Equipment was sold for RM15,800 during 2018. Equipment costing RM18,100 was purchased during the year. Required: (a) Construct a statement of cash flows for Kasih Sayang Sdn Bhd for the year ending 31 December 2018, using indirect methods and according to the IAS 7 layout. (b) Critically evaluate the benefit of IAS 7/FRS 102 Cash Flow Statement from the perspective of relevant stakeholders L