Questions I
Asian Taco Bicycle Shop sells 21-speed bicycles. For purpose of cost-volume-profit analysis, the shop owner has divided its sales into two categories , as follows
Product type Sales Price(RM) Invoice cost (RM) Sales Comission (RM)
High Quality 1,000 550 50
Mediuim Quality 600 270 30
Seventy percent of shop's sales are medium quality bikes. The shop's annual fixed expenses are RM148,500
Task: Assuming a constant sales mix, calculate and describe how the shop could determine its breakeven point in sales value for each product.
Questions II
Bojima Sdn Bhd, procudes and sells 1,000 bottles of anchovy crackers per month at a selling price of RM15 per bottle. Total variable costs and fixed costs in a month are RM8,000 and RM5,000 respectively.
The company intends to implement a new marketing strategy to increase their sales in the following month. If the marketing stategy is implemented, the fixed costs is going to increase by RM1,000 and sales volume is going to increase by 10 percent. The selling price and the variable costs per bottle remain unchanged.
Task: As a new cost and management accountant, you have been asked to determine the break-even point, margin of safety and monthly profit before and after implementing a new marketing strategy of the company.