Analyst Ltd$.$ makes a single product with the following details:

Description Current Situation Proposed Change

Selling Price $(/$unit$)10$

Direct Costs $(/$unit$)5$

Present number of setups per production period,

$($before each production run, setup is done$)$

$42$

Cost per set$-$up $()450$ Decrease by $90$

Production units per run $9601,008$

Engineering hours for production per period $500422$

Cost per engineering hour $()10$

The company has begun Activity Based Costing of fixed costs and has presently identified two cost drivers,

viz. production runs and engineering hours. Of the total fixed costs presently at $96,000,$ after the above,

$72,100$ remains to be analyzed. There are changes as proposed above for the next production period for

the same volume of output. Required:

$($i$)$ How many units and in how many production runs should Catalyst Ltd$.$ produce in the changed scenario

in order to break$-$even?

$($ii$)$ Should Analyst Ltd$.$ continue to break up the remaining fixed costs into activity based costs? Why?