Modem Home Sdn. Bhd. manufactures four types of multi-purpose storage cabinets: Modem, Antique, Trendy and Smart: Business accounting Assignment, UOM, Malaysia

University University of Malaya (UOM)
Subject Business accounting

Question 4
Modem Home Sdn. Bhd. manufactures four types of multi-purpose storage cabinets: Modem, Antique, Trendy, and Smart. The selling price and the marginal cost of each product are as follows

The company’s fixed costs are RM150,000 per annum. There is a shortage of a raw material called Glossy Melamine which is used in all four products. Modem uses 20 ml of Glossy Melamine, Antique 20 ml, Trendy 28 ml, and Smart 30 ml. Only 300,000 ml of Glossy Melamine will be available for the year. In addition, market constraints are expected to restrict the production and sales of each product to:
Modem: 5,000 units, Antique: 4,000 units, Trendy: 3,000 units and Smart: 3,000 units.

Required:
(a) Identify which product (s) the company should concentrate on. Show all workings. (12 marks)

(b) Calculate the numbers of each type of cabinets to be produced and sold to maximize profit of Modem Home Sdn Bhd.

( c ) Prepare a marginal cost statement showing the profit of Modem Home Sdn Bhd for the year.

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