Question 1 Adorable Car Corporation manufactures and retail a specially designed collectible model cars. In the year the company is expected to sell 4,000 units of this model sports car. The cost accountant of the company has provided the following budgeted information for the coming financial year: per unit Sales 225.00 Material costs 47.50 Labor costs 40.00 Variable production overhead 27.50 Variable selling and distrbution costs 35.00 22.50 Fixed production overhead Fixed selling and distribution costs Fixed administration costs 7.50 15.00 The Net Operating Income budgeted for the year is 60,000.00 Required: a) Calculate the break-even point in units and RM for the company. (4 marks) b) Compute the margin of safety for the company in units and percentage. (4 marks) c) The company is considering more automation. This will slash variable production overhead by 20%, but it would cause the fixed production overhead to increase to 115,800. (i) Assuming the company goes ahead with the additional automation, what would be the com- pany's new break-even point in units? (5 marks) (ii) Should the company go ahead with the automation and why? (2 marks)