aa and b

as soon as possible

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Fat Burn Ltd manufactures and bottles a special weight loss drink, that is tailed for people who want to lose weight in a short period of time. The beverage is sold for $54 per bottle to retailers. The following information relates to the production of each bottle of beverage: Direct materials $14.25 Direct labour 17.15 12.28 8% of the selling price Variable factory overhead Sales commissions Fixed factory overhead Fixed Selling and Administrative Expense 43,650 64,350 a) Calculate the break-even point in units and dollar value. 2 marks b) Fat Burn Ltd's management team is considering the following independent alternatives for next year. Which course of action would you recommend to the management team and why? (Round your calculations for the break-even point to the next highest unit. Show all workings). 7 marks 1) If the sales price to be increased by 5%, as a result of increasing fixed selling and administrative expense by $47,500 and decreasing sales commission to 5% of the selling price (no changes to the other variable and fixed cost). 2) Decreasing direct material costs by 5%, increasing direct labour costs by 10%, increasing variable overhead costs by 5%, and to spend $31,000 on fixed advertising costs (no change to price and sales commission)