Management Accounting Assignment 1 Highland Coffee sells organic coffee in packs. Each pack wins sold at the price of $35 last year and a total of 30.000 packs were produced and sold. The variable cost of producing a coffee pack last year win! E Direct material 10.00 Direct labour 12.00 Other direct costs 3.00 Vinable overheads 1.00 The fixed overhead hot year was $200,000. For the forthcoming year, the following costs increases are expected. Direct material 20.00 Chrect labour 16.67 Other direct costs 66.67 Variable overheads 25.00 The fixed overhead for the forthcoming year is expected to increase by am acquisition of new packing machine due to changes in environmental regulations. This machine would cost $50,000 to purchase and would hoot 4 years with expected scrap value of $10,000. The company depreciation policy is to depreciate all machinery on a straight line basis. The machine supplier provides i guaranteed buy-back policy at the following specified prices: After one year E 35.000 After two years 25,000 After three years 17.000 After four years 10,000 Market has shown that if the company keep its increase its selling price below 20%% it would have no impact on the volume sold. However for every 1's Increase above 20%% increase, the number of volume sold can be expected to decrease by 2%. Required: I ) For the forthcoming year: 4) The selling price of the coffee packs if the number of packs sold and the annual profits are to remain as before. (7 marks) by The number of packs that the company would have to sell if it did not change the price charged but maintained the profit level altamed in the previous year. (5 marks) 2) The management accounting CVP analysis has been criticised in that, among other matters, it does not deal with the following: al Situations where sales volume differs radically from production volume. by Simanions where the sales revenue and the total cost functions are markedly non-linear. c) Changes in product mix. dj Risk and uncertainty. Give 2 reasons for each of the whove objections 3 marks)