You are required : 1. Separate the fixed and variable costs of the company 2. Determine the projected Fixed overheads / Operating expenses of the company for 2023 3. Determine the projecte
| The following is the extract of the Income statement of a Rubber Glove company in Malaysia : |
| STATEMENTS OF COMPREHENSIVE INCOME 2016 | 2017 | 2018 | 2019 | 2020 | ||||||
| Revenue | 1,377,931,000 | 1,529,077,000 | 2,079,432,000 | 2,053,916,000 | 2,314,454,000 | |||||
| Cost of sales | -1,150,360,000 | -1,155,975,000 | -1,640,550,000 | -1,818,767,000 | -1,851,563,200 | |||||
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| Gross profit | 227,571,000 | 373,102,000 | 438,882,000 | 235,149,000 | 462,890,800 | ||||
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| Other Income | 8,973,000 | 6,979,000 | 10,372,000 | 26,689,000 | 15,634,000 | ||||
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| Selling and distribution expenses | -46,520,000 | -95,484,000 | -66,008,000 | -67,121,000 | -71,401,000 | ||||
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| Administration expenses | -46,155,000 | -53,091,000 | -80,987,000 | 60,495,000 | -178,910,800 | ||||
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| Operating Profit | 143,869,000 | 231,506,000 | 302,259,000 | 134,222,000 | 228,213,000 | ||||
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| Interest income | 0 | 0 | 4,288,000 | 10,573,000 | 12,340,000 | ||||
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| Finance cost | -10,151,000 | -8,530,000 | -639,000 | -242,000 | -113,000 | ||||
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| Share of loss/profit | 909,000 | -984,000 | -947,000 | 917,000 | 262,000 | ||||
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| Profit before tax | 134,627,000 | 221,992,000 | 304,961,000 | 145,470,000 | 240,702,000 | ||||
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| Taxation | -26,524,000 | -53,922,000 | -54,550,000 | -30,338,000 | -33,417,000 | ||||
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| Profit / (Loss) after tax | 108,103,000 | 168,070,000 | 250,411,000 | 115,132,000 | 207,285,000 | ||||
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You are required :
1. Separate the fixed and variable costs of the company
2. Determine the projected Fixed overheads / Operating expenses of the company for 2023
3. Determine the projected Profit margin of the company’s manufacturing operation
4. Determine the Breakeven point of the company’s manufacturing now ? What is the current level of Safety margin of the company ?
5. Determine the Degree of Operating Leverage (DOL) of the company ?
6. Determine the degree of Financial Leverage (DOL) of the company ?
7. If the company have been selling its rubber glove at an avverage price of RM 0.40 per pair, what could be the lowest price that company could accept for a special order of say 500,000,000 gloves if the company could create the cpacity conveniently without increasing its operating costs ?
8. Based on the average variable costs of manufacturing per pair, could the company consider taking over a manufacturing space / capacity that could produce at RM 0.15 per pair. ?
