Q2, For the month of October the company is considering the use of a new sophisticated method to produce the memory sticks. If the new method is adopted for both types of memory sticks, fixed costs for both products per month will increase by 20% but direct materials, direct labour and variable overhead costs will all decrease by 10%. The October month expected sales and unit selling price will be the same as the month of September. Would you recommend that the company adopt the new method? Determine the expected profit to be made for the October month and use this calculation to explain your answer.

_l |_ Homework 2: CV? Analysis and Multiple Products Due 5 October Neal Electronics Ltd produces two types of memory sticks: a Student Memory Stick and a Professor Memory Stick. The Student Memory Stick sells for $35, and the Professor Memory Stick sells for $100. The company's income statement for the month of September is given below: Student Memory Stick Professor Memory Stick Sales for the September month 20,000 units 5,000 units Total $ $?00,000 $100 $500,000 Direct material cost 100,000 $15 75,000 Direct labour cost 80,000 $ 10 50,000 Variable overhead 20,000 $5 25,000 Fixed Costs 120,000 $11 5 5,000 Net Profit}r oss $380 000 $295 000 Regnired: 1. Calculate the breakeven for each of the following situations: (it If the company made o_nly the Student Memory Stick, what would the breakcven point in units and dollars be for the month of September? (ii) If the company made o_nly the Professor Memory Stick, what would the breakcven point in units and dollars be for the month of September? (iii) Determine the combined breakevcn point in units if the company makes a combination of Student and Professor Memory sticks in the ratio 4:]. Show clearly the breakcven units and dollars (using the ratio given) for the Student Memory Stick and Professor Memory Stick under this combined breakevcn point. (iv) Calculate the margin of safety percentage for the combined production of Student and Professor Memory sticks for the month of September. Explain what this percentage means for the company. 2. For the month of 0.0191101 the company is considering the use of a new sophisticated method to produce the memory sticks. [f the new method is adopted for both types of memory sticks, xed costs for both products per month will increase by 20% but direct materials, direct labour and variable overhead costs will all decrease by 10%. The October month expected sales and unit selling price will be the same as the month of September. Would you recommend that the company adopt the new method? Determine the expected prot to be made for the October month and use this calculation to explain your