PART A MS Sports Sdn. Bhd.(MS) a manufacturer of sports car, intends to produce a sports car, the Model M in conjunction with its 100th anniversary next year. As this will be a special edition, production will be limited to 1.000 Model M cars. Currently, MS pricing policy is to set the selling price of Model M based on its production cost plus 20% mark up. MS is considering using a target costing approach and has conducted market research to determine the features that consumers require in a sports car. Based on this market research and knowledge of competitors' products, MS has decided to price the Model Mat RM200,000. Details for the forthcoming year are as follows: Forecast direct costs for a Model M car: Direct Material RM105.000 Direct labour RM 60.000 Forecast annual production overheads: Activities: Costs pools Total Cost Cost (RM) Drivers driver rate (RM) Production line 46,300.000 See note 1 ? Transportation costs: related to number of deliveries 10,800,000 See note 2 related to the distance travelled 7.200,000 See note 3 Note 1 The production line that would be used for Model M has a capacity of 60,000 machine hours per year. The production line time required for Model M is 6 machine hours per car. This production line will also be used to make other cars and will be working at full capacity. Note 2 The car transporters are forecast to make a total of 640 deliveries in the year and carry 10 cars each time. The car transporter will always carry its maximum capacity of 10 cars. Note 3 The total annual distance travelled by car transporters is expected to be 225,000km. 50,000km of this is for the delivery of Model M cars only. All 1.000 Model M cars that will be produced will be delivered in the year using the car transporters