Answer to Question #260505 in Accounting for enny

Question

SunnyDay Sdn.Bhd. Is a company that sells scarves. Each of its scarves has its own sewn logo. The cost of each logo is ￥27. Darryl, the company's operations manager, received $20 per logo from an outside carrier. SunnyDay Sdn. bhd. Produces 100,000 logos for scarves every month. Its last cost accounting statement is: Direct Material =$550,000, Direct cost=$800,000, Variable overhead=$350,000, Fixed cost=$1,000,000, The Total cost = $2700000.

Give five qualitative factors that Darryl must consider before making a decision. Please give an explanation and appropriate examples to illustrate your factors.

Answer 1

qualitative factors that Darryl must consider before making a decision are:

a) Customer satisfaction with company's products

b) Cost volume profit analysis

c) Brand reputation

d) Competitive advantage

e) Break-even units

Total cost =

Total Fixed Cost +Total Variable Cost

$TC=TFC+TRC$

TC=$2,700,000

Total Revenue =

Price multiply by Quantity

$TR=PXQ$

$20X100,000=$2,000,000

TR=$2,000,000

Cost is higher than revenues so the offer is not promising since the company will generate zero profit.