Back Up (Pty) Ltd is a company that manufactures and sells a single product, the Back Up Flash Drive. The following is the Statement of Comprehensive Income for the companys financial year, ending 31 December 2022: R R Sales (75 000 units) 8 250 000 Less: Variable costs (5 550 000) Direct materials 2 750 000 Direct labour 500 000 Manufacturing overheads 2 164 000 Selling and administrative costs 136 000 Contribution 2 700 000 Less: Fixed costs (2 157 300) Manufacturing overheads 1 902 300 Selling and administrative costs 255 000 Net income for the financial year 542 700 Additional information: Back Up (Pty) Ltd has the capacity to produce 100 000 units per annum. Managing Directors analysis: The Managing Director of Back Up (Pty) Ltd believes that that company could increase the sales by 20 000 Flash Drives in the next Financial year if the product is advertised more often. This would result in an increase in advertising expenditure by R60 000. Given that a higher volume of products will have to be manufactured and therefore purchased, the supplier of direct material will be willing to give a 5% discount on all material purchases at the new production level. Further, another supervisor will be hired to assist with the supervision of the additional production. The additional supervisor will receive an annual remuneration of R150 000. 3 HMAC230-1-Jan-June2023-SA1-V2-SK-12122022 REQUIRED: Ignore taxation and inflation for all questions below. 1.1. Calculate the margin of safety ratio percentage by using the actual production figures in the Statement of Comprehensive Income for Back Up (Pty) Ltds financial year ending 31 December 2022. (10 marks) 1.2. Determine the effect on the net income if the Managing Directors analysis is taken into account i.e., at the increased sales level. Present your answer in a projected Contribution Statement of Comprehensive Income format. (12 marks) 1.3. Calculate the number of units that must be sold in order to generate a net profit of R 2 555 000 after taking into account the information in the Managing Directors analysis and your answer to question 1.2. In addition to your calculations, also comment on whether or not this net profit is achievable by Back Up (Pty) Ltd