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Wilby Fabrications, based in Leeds, manufacture fruit juice concentrate for use in the catering supply industry. The company is currently developing a new product for the overseas market for distribution through a supply partner in the Far East. The new product, development name 'Mango Fill, will commence production in December 2021. The company currently does not have a cost absorption model, preferring instead to allocate costs across its entire product range on a 'pro-rata' basis, according to production levels. This has made it difficult to price each product using the cost plus' method with any degree of accuracy and the Directors are concerned that some existing product lines may be being sold at a loss. The company also relies on Incremental Based Budgeting for business analysis purposes and the level of variances is traditionally very high, making accurate forecasting difficult. Questions (30 marks) 1. If the allocated Fixed Costs of producing the new product are 125,000 and the variable costs are 8.00 per litre, and assuming a selling price of 30.00 per litre, using the net contribution method calculate the Break Even Point of Production for Mango Fill. (10 marks) 2. How might the use of either Break Even Analysis or Cost Volume Profit Analysis enable the company to set profitable sales revenue targets? (10 marks) 3. Outline and explain to the Directors the advantages and disadvantages of switch to Activity Based Costing and explain how this may help them to ensure that all lines are being priced profitably. (10 marks)