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(a) Kato runs a small electric cordless chainsaw tree cutting machine factory. He can make 350 electric cordless chainsaw tree cutting machines per year and

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(a) Kato runs a small electric cordless chainsaw tree cutting machine factory. He can make 350 electric cordless chainsaw tree cutting machines per year and sell them for RM410 each. It costs Kato RM20,000 for raw materials to build the 350 electric cordless chainsaw tree cutting machines. Kato has invested RM795,000 in the factory and equipment needed to produce the electric chainsaw tree cutting machines which are now assets that he owns; RM45,000 from his own savings which was earning 2% interest and RM750,000 borrowed at 3.5% interest. To open his own electric cordless chainsaw tree cutting machine factory, Kato would have to quit his current job, where he is earning an annual of RM35,000. *Hint: The RM795, 000 invested in the factory and equipment is not treated as a cost here because they represent assets of the firm, there is however a cost associated withobtaining these funds. Based on the given situation, (i) What is the total revenue Kato can earn in a year? [2 marks] (ii) What are the explicit costs Kato incurs while producing 350 electric cordless [2 marks] Chainsaw tree cutting machines? (iii) What are the total opportunity costs of producing 350 grass cutting machines (explicit and implicit)? [2 marks] (iv) What is the value of Kato's accounting profit? [2 marks]

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