ABC steel plant industry plans to manufacture a product. The product needs a special component. The industry has reviewed that the special component can be produced in the plant or bought in. An investment is required to start the production of the component for which two mutually exclusive projects A and B representing different production processes are available. The alternative option is to buy in from another company representing project C. Using the annual cost data from table 3, determine which project incurs less cost if the industry considers producing 7,500 units per year. (ii) Determine the Break-Even quantity and margin of safety (units and value) If the company sells 8,000 units of new product per year at a price of RO 250

Table 3 Description Capital (RO) Life (years) Capacity (units per year) Salaries per year (RO) Other fixed costs per year (RO) Wages per year (RO) Cost of materials per year (RO) Other variable costs per year (RO) Scrap value at the end of the year (RO) Cost of capital (%) Project-A 360,160 15 10,000 45,000 40,000 70,000 215,810 35,000 33,620 17 Project-B 499,820 15 12,000 50,000 85.000 80,000 289,800 40,000 43,920 17