Erudite Ltd has an installed annual capacity to produce 2, 00,000 units. For the year ended March 2017, they were able to sell 100,000 units during the year. Following were the extracts from the actual data available for the year ended: Selling price per unit $12.50 Variable cost per unit: Direct materials $5.00 Direct labor $3.00 Manufacturing Overhead $1.00 Selling and administrative $0.25 Fixed costs in total: Overhead $80,000 Selling and administrative $35,000

Required:

a. Prepare an income statement for the year ended March 2017 using the Contribution analysis approach.

b. Prepare an income statement for the year ended March 2017 using the Absorption Cost analysis approach

c. What would be the Break- even level sales both in terms of sales volume and sales value. d. With reference to the projections of Erudite as worked out in question 4 above, Erudite also has an offer for an export contract from Thailand to sell additional 25,000 units of their products at $ 10 per unit which is 20% lower than the normal selling price in the market. Do you think Erudite should accept or reject the export contract?