2. Tool Boxes Ltd produces three models of toolbox: a basic box -"Tools to go, a large divider box -The Workman' and a deluxe divider box -The Specialist. They are sold in DIY stores and online. The budget for the 2022/23 Financial Year shows the following costs and revenues for each Toolbox:- Tools to go The Workman Selling Price Variable Component Costs Variable Labour Costs $ 76 24 12 222 The Specialist $ $ 106 136 34 42 16 24 The Departmental Direct Fixed Costs are budgeted to be $2,000,000. The original budget has been prepared assuming that production and sales will be at the department's full labour capacity. 50,000 toolboxes will be produced in the proportions of Tools to go 20%, The Workman 50% and The Specialist 30%. However, the latest market research considers that sales of only 45,000 Toolboxes can be achieved, and in the proportions of 30%, 55% and 15%. 916 Required: 3 of 11 a) Using the information relating to the original budget for 2022/23 calculate the net income that the company would make. Calculate the breakeven point for the (6 marks) department showing the total number of Toolboxes needing to be sold and the numbers of each type of Toolbox. b) Calculate the corresponding information as in part (a) for the projections of sales of 45,000 Toolboxes. (3 marks) c) The Sales Director feels that the Specialist is not competitive with similar products in the market. She is proposing to upgrade the Specialist increasing the selling price to $150. For the re-designed Specialist the variable component costs will be $52 per unit and the variable labour costs $28 per unit. She is proposing to spend $40,000 in advertising to promote the new Specialist. 50,000 Toolboxes in total would be produced in the proportions of Tools to go 10%, The Workman 55% and The Specialist 35%. The Production Director points out that with the original forecast, the company would be working at full labour capacity and so overtime would be needed to meet the new proposal. The variable labour costs represent direct labour paid at $32 per hour. Overtime is paid at 150% of normal time. Assuming that the suggested changes are made to the Specialist Toolbox, that overtime will be needed and that the anticipated sales will be achieved, calculate the cost of overtime and the net income that the company would make. (7 marks) d) Using the Sales Director's suggested changes, calculate the contribution per labour hour and suggest the price which is needed for the Specialist to be as profitable as the most profitable product per assembly hour. (5 marks) e) Comment on the information you have prepared and explain how it could be used in decision making to result in greater profitability. (4 marks) (total 25 marks)