Enak Enterprise is studying the addition of a new product that would have an expected...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Enak Enterprise is studying the addition of a new product that would have an expected selling price of RM90 and expected variable product cost of RM50 per unit. Anticipated demand is 8,000 units. A new salesperson must be hired because the company's current sales force is working at full capacity. Two compensation plans are under consideration:
Plan A: An annual salary of RM40,000 plus 5% commission based on the amount of sales. Plan B: An annual salary of RM50,000 and no sales commission.
Required:
a) Calculate the contribution margin and net profit of the two plans at 6,000 units. (7 marks) b) Calculate break even point (in unit and in sales) and margin of safety (in unit) of the two plans. Advice to the management which plan to be adopted. (8 marks) c) Suppose management plan to spend RM35,000 on advertising programme of the two plans, how many additional units must the company sell to justify this additional expenditure? (5 marks) (Total:20 Marks)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
