Question 1 (15 marks) DIVOC Limited supplies multiple-layer surgical masks for daily wear and N95 masks with activated carbon options. Certain masks are designed for higher risk environments than others. N95 respirator masks (N95) can filter out 95% of small particles and are designed for the highest-risk environments. Surgical masks (Surgical) are made for lower risk medical situations and are designed to stop the spread of germs from the wearer. Cloth masks (Cloth) are appropriate for lower risk environments outside of medical facilities. These masks can stop the spread of spray from coughs or sneezing and can also be used over surgical masks or respirators to help preserve the mask underneath. DIVOC prepared the following budget information for the coming year: Cloth Sales Variable expenses Contribution margin Fixed expenses Net operating income N95 $ 85,714 25,714 60,000 Surgical $ 1,000,000 800,000 200,000 177,777 97,777 80,000 Total $ 1,263,491 923,491 340,000 (255,000) 85,000 The budget assumes the sale of 20,000 cartons of N95, 100,000 cartons of Surgical, and 80,000 cartons of Cloth. Required: (a) Compute the company's break-even point in dollars given the sales mix above. (3 marks) (b) Assuming the budgeted sales mix is maintained, compute the total contribution margin and net operating income if 300,000 cartons are sold. (3 marks) (C) On top of the assumption of 300,000 cartons are sold, the marketing manager proposes to have the masks in full sight at the shelves of Mannson's Supermarkets by paying a fixed monthly slotting fee of $11,000 per month and $0.50 per carton of masks sold. The marketing manager predicts that the introduction of the masks the supermarkets would increase monthly sales by 15,000 cartons. Advise if the suggestion of the marketing manager should be followed, assuming the budgeted sales mix is maintained. (4 marks) (d) What factors might lead operating results to differ from expectations? (5 marks) [Total for Question 1: 15 marks]