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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Hoi Chong Transport, Limited, operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 162,000 kilometers during a year, the average operating cost is 13.2 cents per kilometer. If a truck is driven only 108,000 kilometers during a year, the average operating cost increases to 16.6 cents per kilometer. Required: 1. Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. 2. Express the variable and fixed costs in the form Y = a + bX. 3. If a truck were driven 135,000 kilometers during a year, what total operating cost would you expect to be incurred? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Variable cost Fixed cost Required 3 Using the high-low method, estimate the variable operating cost per kilometer and the annual fixed operating cost associated with the fleet of trucks. (Do not round your…
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Lucky Transport, Ltd., operates a fleet of delivery trucks in the United States. The company has determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometer. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to 13.4 cents per kilometer. 1. Using the high-low method, determine the following: a. Variable Cost per kilometer b. Fixed Cost per year 2. If a truck was driven 80,000 kilometers during a year, what total cost would you expect to be incurred?
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Island Novelties, Incorporated, of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit and annual sales volume are as follows: Hawaiian Fantasy Tahitian Joy Selling price per unit $ 12 $ 120 Variable expense per unit $9 $ 48 Number of units sold annually 36,000 5,400 Fixed expenses total $ 437,000 per year. Required: 1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break - even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $45 each and that has variable expenses of $27 per unit. If the company can sell 12,000 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution…

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