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  • Maf251 Q5 March 2017 Diana

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    SITI NUR DIANA SELAMAT
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    This document summarizes two proposals to revise the selling price of a product from RM170 to either RM144.50 or RM204. The calculations show that with a revised selling price of RM144.50 (Proposal 1), the projected net profit would be RM622,000. With a revised selling price of RM204 (Proposal 2), the projected net profit would be RM2,388,000. Therefore, the document recommends that Proposal 2 should be chosen as it results in a higher net profit that is RM1,766,000 more than Proposal 1. Marginal cost-plus pricing is also defined as setting the price above the variable cost.

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    MAF251 Q5 MARCH 2017 DIANA

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    This document summarizes two proposals to revise the selling price of a product from RM170 to either RM144.50 or RM204. The calculations show that with a revised selling price of RM144.50 (Proposal 1), the projected net profit would be RM622,000. With a revised selling price of RM204 (Proposal 2), the projected net profit would be RM2,388,000. Therefore, the document recommends that Proposal 2 should be chosen as it results in a higher net profit that is RM1,766,000 more than Proposal 1. Marginal cost-plus pricing is also defined as setting the price above the variable cost.

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    58 views2 pages

    Maf251 Q5 March 2017 Diana

    Uploaded by

    SITI NUR DIANA SELAMAT
    This document summarizes two proposals to revise the selling price of a product from RM170 to either RM144.50 or RM204. The calculations show that with a revised selling price of RM144.50 (Proposal 1), the projected net profit would be RM622,000. With a revised selling price of RM204 (Proposal 2), the projected net profit would be RM2,388,000. Therefore, the document recommends that Proposal 2 should be chosen as it results in a higher net profit that is RM1,766,000 more than Proposal 1. Marginal cost-plus pricing is also defined as setting the price above the variable cost.

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    of 2

    SITI NUR DIANA BINTI SELAMAT

    2020488484

    JAC 110 4D

    QUESTION 5 MARCH2017

    a) i. Selling price (full cost plus 25/100 mark up)


    Rm
    Direct material 50

    Direct labour 30

    Production OH 25

    Sales commission 16

    Fixed OH RM200 000/40 000


    =5
    Fixed admin & selling RM 400 000/40 000
    = 10
    Total (100%) 136

    Profit (25%) 34

    Selling price (125%) 170

    ii. revised selling price(sp)

    proposal 1 170x85/200=RM 144.50

    proposal 2 170x120/100=RM 204.00

    revised net profit

    proposal 1:

    RM
    SP [144.50 x (40 000 × 130%.)] 7 514 000
    (-) TVC
    Direct material
    [RM50 x (40 000 x (130%)] (2 600 000)
    Direct Labour
    (Rm30x (40 000 x 130%)] (1 560 000)
    OH (RM25 x (40 000 X130%.)] (1 300 000)
    SC (RmI6x (40000 x 130%)] ( 832 000)
    Contribution margin 1 222 000
    (-) FC ( 600 000)
    Net profit 622 000
    Proposal 2:

    RM
    SP [204 x (40 000 × 90%.)] 7 344 000
    (-) TVC
    Direct material
    [RM50 x (40 000 x (90%)] (1 800 000)
    Direct Labour
    (Rm30x (40 000 x 90%)] (1 080 000)
    OH (RM25 x (40 000 X90%.)] (900 000)
    SC (RmI6x (40000 x 90%)] (576 000)
    Contribution margin 2 988 000
    (-) FC (600 000)
    Net profit 2 388 000

    b) Cool Day Sdn Bhd must choose proposal 2 as the net profit there is higher than proposal 1 as
    much RM 1 766 000 ( RM 2 388 000 – RM 622 000)
    c) Marginal cost-plus pricing is setting price of product that above variable cost. This is the easy
    and simple method to use

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