Dev is about to open his own food company, Jack of All Trades, which will make and sell either premium yoghurt drinks or pasta. He knows you studied management accounting at university and asks you to help him choose the product line for his business. Dev emphasises that he wants his firm to make and sell only one product. He presents you with the following estimates of direct and indirect costs he expects his firm to incur depending on the product it chooses: Jack of All Trades Summary of expected costs Yoghurt drink Pasta Direct materials cost per unit 7 12 Direct labour cost per unit 10 14 Indirect labour costs 30,000 25,000 Rent and rates 12,500 10,000 Heating, lighting, and power 10,000 12,500 Indirect materials cost 3,500 7,500 Other indirect costs 4,000 3,000 Labour hours for normal activity 20,000 hours 25,000 hours Dev expects that each unit of his yoghurt drink will take 40 minutes of labour to produce, whereas each unit of pasta will take an hour of labour to produce, and assumes that all indirect costs are fixed. He also tells you that he plans to charge his customers a price which is going to be 25% higher than the total unit cost, regardless of which product line is selected. Required: A. Calculate the unit total cost and the unit selling price for the two products Dev is considering. Show your workings. (12 marks) B. Dev would like to find out how many units of each product he would have to make and sell in order to break even and asks you to calculate the break-even volumes of sales. Show your workings. (6 marks) C. He also tells you that his analysis of the local food market indicates that his potential customers would be willing to buy 21,000 units of his yoghurt drink or 15,000 units of pasta. Calculate the respective amounts of profit Dev would earn by selling those amounts of yoghurt drinks or pasta. Show your workings. (4 marks) D. Recommend one product line for Dev's business. (2 marks) E. Outline and critically evaluate the main assumptions of cost-volume-profit analysis techniques. (6 marks)