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An extract from the income statement of POMA Ltd for the previous year is given below: Rs. Sales (50,000 units) 1,000,000 Direct materials Direct labor

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An extract from the income statement of POMA Ltd for the previous year is given below: Rs. Sales (50,000 units) 1,000,000 Direct materials Direct labor cost (50,000 hours) Fixed manufacturing overhead Variable manufacturing overhead Administration overheads Selling and distribution overhead 350,000 200,000 170,000 50,000 180,000 120,000 The directors are keen to improve revenue and productivity and are considering various options You are the management accountant and are requested to compute the following: a. If salesmen are paid commission of 10% of sales, how many units must be sold to achieve breakeven point. (2 Marks) b. By how much does profit change (increase or decrease) if the selling price is reduced by 10% resulting in an estimated increase in sales volume (in number of units) by 30%. (2 Marks) C. By how much does profit change increase or decrease) if the direct labor rate is increased from Rs.4 to Rs.5 per hour. This increase is expected to increase production and sales by 20% without affecting the hours worked. However, advertising costs will increase by Rs.50,000. (2 Marks) d. How many units must be sold in order to achieve a target profit margin of 10% on sales (profit/salesx100) assuming that advertising costs will increase by Rs.300,000 and selling price will increase by 20% (2

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