QUESTION 1 ( 25 MARKS) Mr. Ro and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past five years. However, increased competition has led Mr. Ro, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the companys present growth. To prepare for next years marketing campaign; the companys controller has prepared and presented Mr. Ro with the following data for the current year, 2023: Variable cost (per bowl) N$ Direct materials 3.25 Direct manufacturing labor 8.00 Variable overhead (manufacturing, marketing, distribution, and customer service) 2.50 Total variable cost per bowl 13.75 Fixed costs N$ Manufacturing 25 000 Marketing, distribution, and customer service 110 000 Total fixed costs 135 000 Selling price N$ 25.00 Expected sales, 20 000 units N$ 500 000 Income tax rate 40% 1.1 What is the projected net profit for 2023? 8 1.2 What is the breakeven point in units for 2023? 2 1.3 Mr. Ro has set the revenue target for 2024 at a level of N$ 550 000. He believes an additional marketing cost of N$11 250 for advertising in 2024, with all other costs remaining constant, will be necessary to attain the revenue target without changing the selling price. What is the net income for 2024 if the additional N$11 250 is spent and the revenue target is met? 6 1.4 If the additional marketing cost of N$11 250 is spent, what are the required 2024 revenues for 2024 net income to equal 2023 net income? 3 1.5 At a sales level of 22 000 units, what maximum amount can be spent on advertising if a 2024 net profit of N$60 000 is desired? 6 TOTAL MARKS FOR QUESTION 1 25