Q2: CVP Analysis + Costing Methods [20 Marks] 3. If High Tide decided to introduce beach towels into their product offering High Tide is a one product business and manufactures board short for men. They and forecasted the following sales volumes, would they break even? [5 operate out of rented premises in Currumbin Creek Road, where the factory is split marks] into a manufacturing and storage area and a retail space. Board shorts Towels Forecasted volume (units) 3,500.00 2,000.00 Selling Price S 75.00 $ 30.00 You, as the management accountant for the firm, have been asked to prepare CVP Less Variable Costs Direct Materials 14.25 $ 20.25 analysis using the following information from the previous financial year. Direct Labour 21.00 $ 11.20 Variable Manufacturing Overhead 2.25 S Board shorts 1.20 Selling Price $ 75.00 Total Variable Costs 37.50 $ Less Variable Costs Direct Materials 14.25 Contribution Margin 37.50 -$ 2.65 Direct Labour 21.00 Contribution Margin Ratio 50% -9% Variable Manufacturing Overhead 2.25 Total Variable Costs 37.50 Annual Fixed Costs Utilities 2,500.00 Contribution Margin S 37.50 Insurance 6,000.00 Contribution Margin Ratio 50% Wages 180,000.00 General Office Expenses 8,000.00 Annual Fixed Costs Rent 16,800.00 Utilities 2,500.00 Interest S 500.00 Insurance 6,000.00 Total Operating Expenses $ 213,800.00 Wages 180,000.00 General Office Expenses 8,000.00 Rent 16,800.00 Interest 500.00 4. What type of costing would High Tide use to calculate the total cost of its Total Operating Expenses 213,800.00 products accurately? Please provide a short justification for your answer. [5 A marks] Required: 1. Calculate how many pairs of board shorts High Tide needs to sell to break even. [5 marks] 2. If High Tide sold 4 000 board shorts what would this indicate about their margin of safety? [5 marks]