Enjin Vroom Sdn Bhd operates a factory at the Senawang Industrial Zone that manufacture micron filter for diesel engine. The data given below are for costs in year 2018 for producing and selling 5000 units of the micron filter. Currently, each micron filt
Enjin Vroom Sdn Bhd operates a factory at the Senawang Industrial Zone that manufacture micron filter for diesel engine. The data given below are for costs in year 2018 for producing and selling 5000 units of the micron filter. Currently, each micron filters been sold at RM160.
Direct labour RM 86000
Direct materials RM 60000
Variable manufacturing overhead RM ?
Fixed manufacturing overhead RM 39000
Variable selling & administrative costs RM 7000
Fixed selling & administrative costs RM 12000
| a) Given that the manufacturing cost per unit is RM110, calculate the VARIABLE manufacturing overhead costs in year 2018. | Format : 597000 |
b) Using the that you have calculated in part (a), compute the following: i. Total variable costs | Format : 792000 |
| ii. Total variable costs per unit | Format : 808.5 |
| iii. Total costs | Format : 689000 |
c) Based on the current selling price set by the company, calculate the following: i. Profit per unit for the sold micron filter. | Format : 79.8 |
| ii. Contribution margin per unit of the micron filter | Format : 85.9 |
| iii. Break-even sales amount | Format : 667976 |
| d. Due to change of supplier, the direct materials cost has increased by 10%. The company's new lean manufacturing practice has successfully reduced the fixed manufacturing overhead expenses by RM10,000 per year. Calculate the new breakeven units. | Format : 737 |
Homework Answers
Units Produced & Sold = 4100
Selling Price = RM 180 / Unit
Direct labor = RM 98000
Direct Material = RM 60000
Fixed Manufacturing Overhead = RM 30000
Variable Selling & Administrative costs = RM 8100
Fixed Selling & Administrative costs = RM 12000
(a) Manufacturing Cost per Unit = RM 110
Total Manufacturing Cost = RM 110 * 4100 = 451000
Variable Manufacturing Overhead = Total Manufacturing Cost - Direct labor - Direct Material - Fixed Manufacturing Overhead
= RM 451000 - RM 98000 - RM 60000 - RM 30000
= RM 263000
(b) (i) Total Variable Cost = Direct labor + Direct Material + Variable Manufacturing Overhead + Variable Selling & Administrative costs
= RM 98000 + RM 60000 +RM 263000 + RM 8100 = RM 429100
(ii) Variable Cost per Unit = RM 429100 / 4100 = RM 104.66
(iii) Total Cost = Direct labor + Direct Material + Variable Manufacturing Overhead + Variable Selling & Administrative costs + Fixed Manufacturing Overhead + Fixed Selling & Administrative costs
= RM 98000 + RM 60000 +RM 263000 + RM 30000 + RM 8100 + RM 12000 = RM 471100
(c) (i) Total Sales (4100* RM 180) = RM 738000
Total Cost = RM 471100
Profit = Total Sales - Total Cost
= RM 738000 - RM 471100 = RM 266900
Profit per Unit = RM 266900 / 4100 = RM 65.1
(ii) Total Sales = RM 738000
Total Variable Cost = RM 429100
Contribution = RM 738000 - RM 429100 = RM 308900
Contribution per Unit = RM 308900 / 4100 = RM 75.34
(iii) Break Even Sales = Total Cost = RM 471100
(d)
Direct Material Cost increased by 10%
New Direct Material Cost = (110% of RM 60000) = RM 66000
New Fixed Manufacturing Overhead = RM 20000
Break-Even Units = Total Fixed Cost / New Contribution Margin per Unit
= RM 32000 / RM 73.88 = 433 Units
Note -
New Total Variable Cost = RM 429100 + RM 6000 = RM 435100
Contribution = RM 738000 - RM 435100 = RM 302900
New Contribution per Unit = Contribution / Units = RM 302900 / 4100 = RM 73.88
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Enjin Vroom Sdn Bhd operates a factory at the Senawang Industrial Zone that manufacture micron filter for diesel engine. The data given below are for costs in year 2018 for producing and selling 5000 units of the micron filter. Currently, each micron filt
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