Question 1 (15 marks) Doghay is the one of the largest commercial airplane manufacturers. In 2017, it began development of the 797-III, a 280-passenger plane with a range up to 4,800 miles. First deliveries will take place in 2021. The price will be about $70 million per plane. Assume the annual fixed costs for the 797-III are $900 million and its variable cost per 797-III is $40 million. Required: (a) How many planes does Doghay need to sell in order to break-even? (3 marks) (b) If Doghay automated its production process further and increased its fixed costs by $120 million then it can achieve a reduction of variable cost per airplane by $3 million. What are i. the operating profit if 40 planes will be sold in 2021; and (3 marks) ii. your comments on the results? (3 marks) (c) Ignore question (b) above. If fixed costs do not change but variable costs increase by 25% before deliveries of any airplanes in 2021, compute the new break-even point in dollar sales; and (3 marks) advise what strategies Doghay might use to ensure profitable operations with increase in variable costs? (3 marks) [Total for Question 1: 15 marks]