Teh Teratai Sdn. Bhd. involved in making and distributing its herbal tea product, HebatinBandar Tengah. Its annual fixed cost is RM162,000, where RM130, 000 is fortheadministration and distribution effort involved in selling the products. The sales manageristargeting a total of 35, 000 boxes would be sold per year. The variable cost for processingisRM2 per box and its variables sales expense is 30 percent of the selling price. There will benoadministrative cost incurred. The management is targeting a profit of RM160, 000 forthecurrent year. (a) Based on the above information, determine the selling price of one box ofHebat. (b) There are several reasons for cost - based approach of a product to become popularandimportant in pricing decision. Discuss these reasons.

Req (a):Let's break-down the given data for better understanding of the scenario-Target profit…

Answered: Teh Teratai Sdn. Bhd. involved in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
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