(a) Hydrangea Limited sells air coolers. The target profit for the year is $250,000 with a selling price of $300 per unit. The production costs are as follows:

Variable cost per unit $50 Annul fixed costs for the year is $1,472,500

Required:

(i) Calculate the breakeven point in units. [ 3 marks]

The sales manager is considering increasing the price to $360 per unit, with an expected in sales volume.

(ii) Calculate the new breakeven point in units if the selling price is increased to $360 per unit. [ 3 marks]

(iii) Briefly explain the reason for the difference in breakeven point before and after the increase in the selling price of the panel. [ 3 marks]

(b) Describe the three categorises of inventories found in manufacturing companies.

[ 6 marks]

(c) Below are the costs incurred during the year by Hydrangea Limited to manufacture 2,000 ceiling fans:

Costs Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expense Fixed selling and administrative expenses Total

Required:

(i) Using Absorption costing, calculate the total product cost. (ii) Calculate the cost per computer.