Jentakap Sdn Bhd produces a single product that is priced at RM120 per unit.

The costs of its

operation for 2008 are as follows:RM
Cost per unit of product:
Direct material
Direct labour
Variable production overhead
Selling and distribution
Fixed overhead (based on production and sales of 4,000 units)
Production
Selling and distribution

30
24
6
1.35
19,800
12,600

Required:
a. Using marginal costing income statement, calculate the net profit for year 2008 if the
sales unit is 4,000.
(7 marks)
b. Determine the breakeven point for 2008 in units and value.
(2 marks)
c. Determine Jentakaps margin of safety for 2008 in units.
(1 mark)
d. Determine the number of units would have to be sold by Jentakap in order to have a
profit of RM360,000.
(2 marks)
e. Jentakap Bhd estimates that for the year 2009, direct material cost will increase by 5%,
direct labour cost decrease by 10% and fixed production overhead will increase by 2%.
All other costs will remain unchanged. Determine the selling price in order to earn a
profit of RM400,000 at production level of 6,000 units.
(6 marks)
f.

Explain the term break-even point.

(2 marks)
(Total: 20 marks)

Answer 2
Jentakap Berhad
Marginal Costing Income Statement for year 2008
Sales (RM120 x 4,000 units)
Less: Variable cost of sales
Direct material (RM30 x 4,000 units)
Direct labour (RM24 x 4,000 units)
Production overhead (RM6 x 4,000 units)
Selling and distribution overhead (RM1.35 x 4,000 units)

480,000
120,000
96,000
24,000
5,400
245,400
234,600

Contribution margin
Less: Fixed cost
Production
Selling and distribution

19,800
12,600
32,400
202,200

Net profit

(7 marks)
b.

BEP(u)

FC
CM/U
RM32,400
(RM234,600 / 4,000 )
552 units

=
=
=

BEP (u) x SP u
552 x RM120
RM66,240

BEP (RM)

(2 marks)
c.

MOS (u)

=
=
=

Sales (u) BEP(u)

4,000 552
3,448
(1 mark)

d.

Target sales(u)

=
=
=

FC + TNP
CM/U
RM32,400 + RM360,000
(RM234,600 / 4,000)
6,691 units
(2 marks)

e.

New variable cost per unit

Direct material (RM30 x 1.05)
Direct labour (RM24 x 0.9)
Variable overhead:
Production

31.50
21.60
6.00

Selling and distribution

New fixed cost

Production (RM19,800 x 1.02)
Selling and distribution

TS (u) =
6,000 u =
6,000 SP =
SP =

1.35
60.45
20,196
12,600
32,796

FC + TNP
CM/U
32,796 + 400,000
SP 60.45
795,496
RM132.58
(12 x mark = 6 marks)

f.

Break-even point means the point of sales where total sales is just enough to cover total
costs . The firm did not make any profit or suffer any loss .
(2 x 1 mark = 2 marks)
(Total: 20 marks)