al QUESTION 1 [50 MARKS] SECTION A COMPULSORY Active Producers Inc. suffered a loss for the first month of operations. Following is the statement of profit and loss prepared by the accounting service providers of Active Producers. Sales Less variable cost of goods sold Gross contribution margin Less variable selling and administrative expenses Contribution margin Less fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Net operating loss Rs Rs 400,000 160,000 240,000 60,000 180,000 150,000 40,000 190,000 (10,000) The loss created a serious problem because company was planning to use the statement to encourage investors to purchase the inventory of the company. Other relevant data is given below: Units produced during the first month of operation 50,000 40,000 Units sold during the first month of operation Variable unit cost: Rs Direct materials 2.00 Direct labour 1.60 Variable manufacturing overhead expenses 0.40 Variable selling and administrative expenses 1.50