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  • MA 2 Part (A) Thomas

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    ThomasSam
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    The document discusses the financial considerations of closing the Malacca depot. It states that while closing the depot would forgo revenue of RM1,500,000, costs of tires, wages, salaries and a portion of overheads totaling RM1,184,500 would be avoided. The net revenue foregone would be RM315,500. However, keeping the depot open would incur a loss of only RM50,000 as it would contribute RM315,000 to overheads, compared to a larger loss of RM365,500 if closed. Therefore, it is recommended to keep the Malacca depot open on financial grounds.

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    MA 2 part (a) Thomas

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    The document discusses the financial considerations of closing the Malacca depot. It states that while closing the depot would forgo revenue of RM1,500,000, costs of tires, wages, salaries and a portion of overheads totaling RM1,184,500 would be avoided. The net revenue foregone would be RM315,500. However, keeping the depot open would incur a loss of only RM50,000 as it would contribute RM315,000 to overheads, compared to a larger loss of RM365,500 if closed. Therefore, it is recommended to keep the Malacca depot open on financial grounds.

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    8 Ansichten1 Seite

    MA 2 Part (A) Thomas

    Hochgeladen von

    ThomasSam
    The document discusses the financial considerations of closing the Malacca depot. It states that while closing the depot would forgo revenue of RM1,500,000, costs of tires, wages, salaries and a portion of overheads totaling RM1,184,500 would be avoided. The net revenue foregone would be RM315,500. However, keeping the depot open would incur a loss of only RM50,000 as it would contribute RM315,000 to overheads, compared to a larger loss of RM365,500 if closed. Therefore, it is recommended to keep the Malacca depot open on financial grounds.

    Copyright:

    © All Rights Reserved
    Als DOCX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 1

    (a) Discuss whether the Malacca depot should be closed purely on the basis of

    financial considerations.
    InthecaseofclosureoftheMalaccadepot,thesalesrevenueofRM1,500,000will
    beforegone.Despitethat,thecostoftyresamountingRM900,000,wagesandsalaries
    ofRM220,000and15%ofoverheads(15%XRM430,000=RM64,500)wouldno
    longerbeincurred.
    Intotal,theclosingofMalaccadepotwouldforegorevenueof:
    Sales
    CostofTyres
    Wages&Salaries
    Overheads

    RM1,500,000
    (RM900,000)
    (RM220,000)
    (RM64,500)

    RevenueForegone

    RM315,500

    The balance 85% of revenue amounting RM365,500 would still be


    incurred. If kept open, the depot would contribute RM 315,000
    towards the overheads.
    Thus, it would be recommended to keep Malacca depot in operation
    as it would only sustain a loss of RM50,000 in contrast to a loss of
    RM 365,500 if it were closed.

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