budget has haikes a sngle produet - a tnditional English tweed cap. For 2016 the following Hills Hats makes a budget has been prepared: S per cap 50.00 Selling price per cap Direct materials Direct staff costs Variable manufacturing overhead Fixed overhead 8.00 14.00 3.00 100,000 Required: (a) Calculate: ) the break-even point for 2016 in terms of the number caps and total sales dollars (ii) the margin of safety in terms of the number of the number caps, and (ii) the budgeted profit for 2016. (4 marks) (2 marks) (2 marks) (i) For 2017 Hills Hats is considering purchasing a new machine that would result in direct labour costs per hat reducing to $7 and fixed manufacturing costs to increase to $134,000. How many hats would need to be sold to earn the same budgeted profit as 2016? 3 marks) (ii) Would you recommend the change? Explain your reasons. (4 marks) ITOTAL OF 15 MARKS ACCY 111 Page 4 of 10 budget has haikes a sngle produet - a tnditional English tweed cap. For 2016 the following Hills Hats makes a budget has been prepared: S per cap 50.00 Selling price per cap Direct materials Direct staff costs Variable manufacturing overhead Fixed overhead 8.00 14.00 3.00 100,000 Required: (a) Calculate: ) the break-even point for 2016 in terms of the number caps and total sales dollars (ii) the margin of safety in terms of the number of the number caps, and (ii) the budgeted profit for 2016. (4 marks) (2 marks) (2 marks) (i) For 2017 Hills Hats is considering purchasing a new machine that would result in direct labour costs per hat reducing to $7 and fixed manufacturing costs to increase to $134,000. How many hats would need to be sold to earn the same budgeted profit as 2016? 3 marks) (ii) Would you recommend the change? Explain your reasons. (4 marks) ITOTAL OF 15 MARKS ACCY 111 Page 4 of 10