QUESTION 4 Millenium Bhd is a manufacturing company which produces one type of product, Z3. The current year's budget based on the production and sales of 40,000 units of Z3 shows the following data: RM Total variable costs 2,520,000 Fixed overhead costs: Production 2,900,000 Administrative 500,000 Selling and distribution 578,000 Total contribution 4,680,000 The manager is not satisfied with the current sales and budgeted annual profit. He wishes to have a minimum annual profit of RM1,000,000. He suggests that the product should be advertised on television which will incur additional cost of RM50,000. He also proposes to hire a consultant and the annual fee is RM252,000. As a result of these sales volume will increase by 32%. The variable cost per unit will remain unchanged. Required: a. Using the current budgeted data only, calculate: i) the annual profit ii) the selling price per unit iii) the break-even point in units b. Based on the manager's suggestions, calculate: i) the new selling price to obtain the minimum annual profits of RM1,000,000. ii) the revised break-even point in units using the price calculated in (i) above.
QUESTION 4 Millenium Bhd is a manufacturing company which produces one type of product, Z3. The current year's budget based on the production and sales of 40,000 units of Z3 shows the following data: RM Total variable costs 2,520,000 Fixed overhead costs: Production 2,900,000 Administrative 500,000 Selling and distribution 578,000 Total contribution 4,680,000 The manager is not satisfied with the current sales and budgeted annual profit. He wishes to have a minimum annual profit of RM1,000,000. He suggests that the product should be advertised on television which will incur additional cost of RM50,000. He also proposes to hire a consultant and the annual fee is RM252,000. As a result of these sales volume will increase by 32%. The variable cost per unit will remain unchanged. Required: a. Using the current budgeted data only, calculate: i) the annual profit ii) the selling price per unit iii) the break-even point in units b. Based on the manager's suggestions, calculate: i) the new selling price to obtain the minimum annual profits of RM1,000,000. ii) the revised break-even point in units using the price calculated in (i) above.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 47P: (Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30...
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:QUESTION 4
Millenium Bhd is a manufacturing company which produces one type of product, Z3. The
current year's budget based on the production and sales of 40,000 units of Z3 shows the
following data:
RM
Total variable costs
2,520,000
Fixed overhead costs:
Production
2,900,000
Administrative
500,000
Selling and distribution
578,000
Total contribution
4,680,000
The manager is not satisfied with the current sales and budgeted annual profit. He wishes to
have a minimum annual profit of RM1,000,000. He suggests that the product should be
advertised on television which will incur additional cost of RM50,000. He also proposes to hire
a consultant and the annual fee is RM252,000. As a result of these sales volume will increase
by 32%. The variable cost per unit will remain unchanged.
Required:
a. Using the current budgeted data only, calculate:
i) the annual profit
ii) the selling price per unit
iii) the break-even point in units
b. Based on the manager's suggestions, calculate:
i) the new selling price to obtain the minimum annual profits of RM1,000,000.
ii) the revised break-even point in units using the price calculated in (i) above.
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