Question

A. Ling, Johnson, Lesley, and Miya commenced business and named their company as Moba
Teknologi Sdn Bhd. The company sells a ready-to-use software product, ML1 for the use of
small businesses. The current selling price for the product is $500. Next year in 2020, the
company planned to sell 7,300 units. The followings are information on the expenses:
Cost of software $180 per unit
Shipping and handling $20 per unit
Annual fixed cost $1,200,000

Required:
a. Calculate Moba Teknologi’s breakeven point in unit and value ($).
b. Calculate the next year's margin of safety (in percentage).
c. Calculate the company’s operating income for the year 2020 if there is a 10% increase
in unit sales.

B. Suppose in the year 2020, Moba Teknologi will sell two products; ML1 and ML2. The product
cost and sales information are as follows:
Selling price ML1 $500 ML2 $700
Variable cost per unit ML1 $200 ML2 $300
The total annual fixed expense is $3,900,000, while the expected sales mix is three ML1 to
one ML2.

Required:
a. Calculate the total contribution margin for ML1 and ML2.
b. Calculate the break-even point in the unit for each product.

Answer 1