Please answer this question

Smart Technology Company (STC) manufactures components for the aviation industry. In recent years, the business has experienced a fierce competition. Its latest Income statement is presented in the table below: Sales revenue (2,000 units) E 60,000 Manufacturing costs of goods sold: Direct materials and labour (variable) costs E18,600 Variable manufacturing overhead costs E 3,800 Fixed manufacturing overhead costs E 20,400 Total manufacturing costs of goods sold: E 42,800 Selling and Administrative costs: Variable Selling costs E 5,800 Fixed Administrative costs E 6,630 Total Selling and Administrative costs: E 12,430 Total costs E 55,230 Profit E 4,770 Question 17 continued overleaf PTO Page 8 of 10a) Based on the last year results, calculate: i) Total variable costs and total fixed costs. ii ) Total Contribution Margin and Contribution margin ratio. Sales revenue at the break-even point. The margin of safety in a percentage (%) term. V) The number of units the company will have to sell to earn a profit that equals 20% of the sales revenue. (12 marks) b) Explain the underlying assumptions and limitations of break-even point analysis. (8 marks) c) Currently, STC is making all components. A supplier has approached the company to supply one of the components, the polystyrene Component P at the price of f12 per unit. The company estimates that the demand for the component will continue to be 2,000 units per year. If STC outsources the component, the direct material and labour costs will be reduced by 40%. The variable manufacturing overhead costs will be reduced by half; and fixed manufacturing overhead costs will be reduced by $14,000 in total partially due to the redundancy of support manufacturing employees. All the other costs will remain unchanged. i) Identify and calculate the net value of relevant costs and benefits. Advise the company whether they should make or buy the Component P, explaining financial and non-financial factors that might influence their decision. i) Calculate the maximum price which STC would be willing to pay for the outsourcing of Component P. (15 marks) (Total of 35 marks)