Profit Sdn. Bhd. (PSB) manufactures a single product. The budgets prepared for next year includes the following information: Item RM Fixed costs per annum I00 000.00 Selling price per unit 47.00...

1. A notice is received informing machinery rental increase by RM8 000 per annum. Calculate the additional units must be sold to meet the increase without any change in the profit obtained from the previous period.


2. The general manager believes that an additional advertising expense of RM10 000 will generate a 10% increase in the numbers of units sold. Determine whether the advertising expense should be increased.  State your reasons.

Extracted text: Profit Sdn. Bhd. (PSB) manufactures a single product. The budgets prepared for next year includes the following information: Item RM Fixed costs per annum I00 000.00 Selling price per unit 47.00 Direct materials cost per unit 6.00 Direct labour cost per unit 8.00 Variable overhead cost per unit 8.00 PSB currently sells 8 o0o units of its product.