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1. The Hooper Company manufactures an engine for vacuum cleaners called the "Scooper." Cost and...

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Accounting

image 1. The Hooper Company manufactures an engine for vacuum cleaners called the "Scooper." Cost and revenue data for the "Scooper" are given below, based on sales of 40,000 units. Cost of goods sold consists of RM800,000 of variable costs and RM320,000 of fixed costs. Operating expenses consist of RM40,000 of variable costs and RM60,000 of fixed costs. Hooper Company received an order from Z77 Co for 6,000 units at a price of RM25.00. There will be no increase in fixed costs, but variable costs will be reduced by RM0.54 per unit because of cheaper packaging. Hooper also received an order from AAACo for 2,500 units at RM29 per unit. Packaging costs will not be reduced on this order. Required a) Prepare a contribution margin income statement based on sales of 50,000 units [20 marks] b) Calculate the break-even point in units and sales ringgits. [10 marks] c) Calculate the safety margin in ringgits. [10 marks] d) Assuming the Hooper Company cannot fill the orders from both Z7ZCo and AAACo, advice one should they accept. [10 marks]

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