1. I-Tech Sdn. Bhd. manufactures three different products and the following information has been collected from the books of accounts:

	PRODUCT
	I-Smart	I-link	I-Spy
Sales mix	35%	35%	30%
Selling price (RM)	30	40	20
Total variable cost (RM)	382,500
Total fixed cost (RM)	180,000
Total sales (RM)	600,000

The company has currently under consideration to discontinue the production of I-Spy and replace it with product I-Match. The following results are anticipated with the new plan:

	PRODUCT
	I-Smart	I-link	I-Match
Sales mix	50%	25%	25%
Selling price (RM)	35	40	35
Total variable cost (RM)	387,500
Total fixed cost (RM)	180,000
Total sales (RM)	700,000

Total cost and sales are the accumulation of three product. It is assumed that the variable cost per unit remain constant for all products.

Q2 (Continued)

Required:

1. Calculate the BEP in unit and RM for the three products based on the given sales mix for both alternatives. (Answers to be rounded up to nearest figure)

(10 marks)

2. Advise the company whether they should continue with the changeover to production of I-Match? Give reasons for your answer. Support your answer with proper workings. (4 marks)

3. Explain three (3) possible risks associated with heavy reliance on CVP analysis.

(6 marks)