Question

Gorilla Sdn Bhd manufactures a single product for which the following has been compiled:
Selling price per unit RM50
Variable cost RM30
Fixed cost RM50,000

Required:
a) Calculate contribution margin per unit and ratio.                                                      
b) Calculate breakeven point in unit and RM.                                                             
c) If unit sold is 3,000, calculate the profit earnied by the company.                         
d) If the target profit is RM20,000 how many unit must be sold?                               
(Total: 15 Marks)

Answer 1

Answer-a)-Contribution margin per unit= selling price per unit- variable cost

=RM50 -RM30

=RM 20

Contribution ratio= contribution margin per unit / sales

=RM20/ RM 50

=40%

b)-Break even point in unit= Fixed cost / contribution Margin per unit

= RM 50,000/ RM 20

=2,500 units

Break even point in RM= Break even point in units × Selling price per unit

=2,500 * RM 50

= RM 125,000

c) - Profit earned on 3,000 units sold:-

Sales (3000*50)	RM 150,000
Less variable cost (3,000*30)	RM 90,000
Contribution	RM 60,000
Less fixed cost	RM 50,000
Profit	RM 10,000

d)-

Unit Sales =	Fixed Costs + Target Profit
Contribution Margin per Unit

=RM 50,000 + RM 20,000/ RM 20

=RM 70,000/ RM 20

=3,500 units

3,500 units must be sold to achieve profit of RM 20000.

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