Product 22 is sold by Underground Ltd. Product 22 is the newest product to be manufactured and sold by the company. The total fixed costs to manufacture Product 22 are 50,000. The variable cost per unit consists of direct material costs of 30, direct labour costs of 26 and variable overhead costs of 9 per unit. Product 22 is sold for 95 per unit. You are asked to provide the following information regarding Product 22 to management. Show full workings. (a) How many units of Product 22 do the company need to make and sell in order to make a profit of 30,000? (3 Marks) (b) How many units of Product 22 will the company need to sell in order to breakeven? (3 Marks) (c) What is the Product 22s contribution-to-sales ratio? (3 Marks) (d) If the company were able to reduce its fixed overheads to 30,000 (from the current cost of 50,000) how would this change the following: 1) The breakeven point in units; (4 Marks) 2) Product 22s contribution to sales ratio? (2 Marks) (e) You are also given the following information regarding Product 23: Product 23s Contribution to Sales ratio is 30% Product 23s total sales value at breakeven point is 50,000 Calculate the total value of sales () required in order to make a profit of 8,000. (5 Marks) ACCT06038 Management Accounting 2 Summer Assessment 2019/2020 Page 5 of 9 (f) Explain, using example where appropriate, why the separation of costs into fixed and variable cost makes marginal costing such a valuable tool in assisting managers to make decisions