Legacy Roofing Global Ltd specialises in roofing sheets manufacturing producing

three variants below:

$1.$ Basic $$ this is transparent mainly for use on garden sheds.

$2.$ Standard $$ standard quality house roofing sheets.

$3.$ Premium $$ high quality house roofing sheets.

Each of these roofing sheets uses Special Weatherproof Material which blocks outside weather from affecting indoors. Due to industrial actions, the maximum supply of the Special Weatherproof Material as confirmed by Protect Supplies Ltd$,$ the supplier is $312,300$ metres.

Maximum market demand and resource requirements of each of these roofing sheets for year $2024$ are shown below:

Budgeted data year ending $31$ August $2024$

Basic Standard Premium

Maximum demand $11,00031,00023,000$

Special Weatherproof Material per sheet $($metres$)2$ Metres $5$ Metres $6$ Metres

Legacy Roofing Global Ltd$$s employs a low cost and no$-$frills strategy aiming value for money delivery to its customers. To curtail high cost of stock storage, Legacy Roofing Global Ltd operates on a just$-$in$-$time production $($JIT$)$ method so that opening and closing inventory levels of the Special Weatherproof Material are zero.

Without mandate, Amelia Rose Legacy Roofing Global Ltd$$s Sales Director has already accepted an order for $12,000$ Standard Roofing Sheets Contract to Rolco Construction Group that, if not fulfilled, would incur a financial penalty of $18,000.$ This order is not included in the Standard$$s maximum market demand figure. This implies Legacy Roofing Global Ltd should prioritise fulfilment of the Standard Roofing Sheets Contract ahead of normal annual demand requirements. The contract selling price per Standard Roofing Sheet is the same as normal Standard Roofing Sheets.

Legacy Roofing Global Ltd$$s directors need to know whether they should go ahead and satisfy the contract and then prioritise production in the normal way or whether it should consider breaching the Rolco Construction Group$$s Standard Roofing Sheets Contract.

You have been provided with the following actual results for years ended $31$ August $2022$ and August $2023$:

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Actual results for year ended $31$ August $2022$

Basic Standard Premium Total

Sales $($Number of sheets$)7,80024,02017,860$

Sales Revenue $()109,590473,194430,4261,013,210$

Raw Materials $()24,960112,89496,444234,298$

Direct Labour $()31,200127,306128,592287,098$

Semi$-$Variable Overheads $()42,20076,35084,180202,730$

Total Costs $98,360316,550309,216724,126$

Profit$/($Loss$)()11,230156,644121,210289,084$

Actual results for year ended $31$ August $2023$

Basic Standard Premium Total

Sales $($Number of sheets$)8,30026,34021,320$

Sales Revenue $()116,615518,898513,8121,149,325$

Raw Materials $()26,560142,236136,448305,244$

Direct Labour $()42,330165,942172,692380,964$

Semi$-$Variable Overheads $()43,10082,43098,740224,270$

Total Costs $111,990390,608407,880910,478$

Profit$/($Loss$)()4,625128,290105,932238,847$

The selling price per roofing sheet, raw materials, other variable overheads and labour costs per roofing sheet for year ending $31$ August $2024$ will be the same as those in year ended $31$ August $2023.$

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Required:

Use Management Accounting techniques for example High$-$Low Method where necessary and applicable.

$3\mathrm{.}1.$ In light of the scenario above, rank these three roofing sheet variants $($Basic$,$ Standard and Premium$)$ in the order in which they must be produced by Legacy Roofing Global Ltd $$ Rank $1$ being the one to be prioritised. Clearly show your workings

$3\mathrm{.}2.$ Prepare a budgeted production schedule and a Marginal Costing Income Statement $($analysed by product$)$ for the year ending $31$ August $2024$ assuming that the Standard contract is honoured.

$3\mathrm{.}3.$ Prepare a budgeted production schedule and a Marginal Costing Income Statement $($analysed by product$)$ for the first half of $2018$ assuming that the Standard contract is not honoured.

$3\mathrm{.}4.$ Considering quantitative and qualitative issues, critically evaluate then advise Legacy Roofing Global Ltd$$s Directors whether to accept or reject the Rolco Construction Group$$s Standard Roofing Sheets Contract.

$3\mathrm{.}5.$ You have now been advised that a new roofing sheets manufacturer that will compete with Legacy Roofing Global Ltd has been established that would force Legacy Roofing Global to reduce its selling price per roofing sheet by $15\%$ in $2024.$ Protect Supplies Ltd$,$ the supplier of Special Weatherproof Material has also hinted that the price of the Special Weatherproof Material might increase by $10\%$ in $2024.$

Assuming these changes $(15\%$ selling price per sheet reduction and a $10\%$ increase in the Special Weatherproof Material$),$ calculate the Breakeven Point number of sheets and Breakeven Point Revenue $($s$)$ for each product.

$(3$ marks$]$

$3\mathrm{.}6.$ Critically examine the assumptions and limitations of the Cost$-$Volume$-$Profit Analysis technique about Legacy Roofing Global Ltd$.$