Quyox Sdn Bhd manufactures a special toy called Omma that are sold through a network of...
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Quyox Sdn Bhd manufactures a special toy called Omma that are sold through a network of sales agents throughout Malaysia. The company sold 67,500 units of Omma in 2022 with equivalent to sales amounting to RM1,350,000. The sales agents are currently paid at 15% commission on sales. The following is the pro forma (projected) statement of profit or loss and other comprehensive income for the year ended 31 December 2022. QuYox Sdn Bhd Pro Forma Statement of Profit or Loss and Other Comprehensive Income For the r Ended 31 December 2022 Sales Cost of Goods Sold: Variable Fixed Gross Profit Operating expenses: Sales Commision Fixed Advertising Expenses General and Administrative Expenses: Rental expenses Administrative Salaries Expenses Insurance Expenses Net Income 675,000 135,000 202,500 33,750 27,000 67,500 20,250 1,350,000 810,000 540,000 351,000 189,000 The management is aware that for the year 2022, the net income to sales ratio (net income divide by sales) is less than 20%, the average ratio for other companies in similar industries. Therefore, the company targets to obtain a net profit of 30% in 2023 to compete with the competitors. In order to achieve that, a few alternatives plan should be considered. INSTRUCTION As the newly hired Account Executive, you are required to prepare a report to propose/suggest a few alternatives to the management of the company for future expansion. 1. Calculate the Break-Even Point (BEP) in units and amount and identify the number of units of product Omma that need to be sold by the company in order to obtain a net income of 30% of sales. Briefly describe possible actions that should be taken by the company to achieve the target. Quyox Sdn Bhd manufactures a special toy called Omma that are sold through a network of sales agents throughout Malaysia. The company sold 67,500 units of Omma in 2022 with equivalent to sales amounting to RM1,350,000. The sales agents are currently paid at 15% commission on sales. The following is the pro forma (projected) statement of profit or loss and other comprehensive income for the year ended 31 December 2022. QuYox Sdn Bhd Pro Forma Statement of Profit or Loss and Other Comprehensive Income For the r Ended 31 December 2022 Sales Cost of Goods Sold: Variable Fixed Gross Profit Operating expenses: Sales Commision Fixed Advertising Expenses General and Administrative Expenses: Rental expenses Administrative Salaries Expenses Insurance Expenses Net Income 675,000 135,000 202,500 33,750 27,000 67,500 20,250 1,350,000 810,000 540,000 351,000 189,000 The management is aware that for the year 2022, the net income to sales ratio (net income divide by sales) is less than 20%, the average ratio for other companies in similar industries. Therefore, the company targets to obtain a net profit of 30% in 2023 to compete with the competitors. In order to achieve that, a few alternatives plan should be considered. INSTRUCTION As the newly hired Account Executive, you are required to prepare a report to propose/suggest a few alternatives to the management of the company for future expansion. 1. Calculate the Break-Even Point (BEP) in units and amount and identify the number of units of product Omma that need to be sold by the company in order to obtain a net income of 30% of sales. Briefly describe possible actions that should be taken by the company to achieve the target.
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Answer rating: 100% (QA)
To calculate the BreakEven Point BEP in units and amount we need to determine the level of sales at which the companys total costs are equal to its to... View the full answer
Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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