Page 6 of 10 Mode Code ACONDIC 2 QUESTION 4 Helot Co is a health food company producing and selling a high-energy product "Shakes', to gyms and health food shops. To manufacture one unit of "Shakes', the company uses 3 of direct material and E2 of direct labour cost. Other variable overheads amount tot per unit of production. The annual foxed costs of operating the company for a year are estimated at 200,000 Helot Co is expected to have a big share in the energy drinks market and has huge sales. The expected sales for the coming year are 50,000 units at a selling price of 11. Required: The managing director of Helot Co has requested you to calculate the following information to present in the next board meeting. a) What is the company's break-even point in number of units and in sales revenue (L)? (4 marks) b) What is the margin of safety in number of units and briefly explain what this figure means? (4 marks) c) How many units should the company sell per year in order to make an annual profit of 100.0007 .) Refer to the original data. The company is discussing the construction of a new automated plant to manufacture the standard Shakes. The new plant would slash variable costs per unit by 20%, but it would cause foxed costs to double in amount per year of the new plant is built, what is the impact of this decision on the break-even point in units? (4 marks) .) Discuss the assumptions/limitations of the break-even analysis in making management decisions. (9 marks) (Total: 25 marks) (QUESTION 5 STARTS ON THE NEXT PAGE] CAN12