QUESTION 1 Bara Co. manufactures and sells an electronic component that is used in supercomputers, ships, and aeroplanes. The following costs and revenue forecasts at various level of production have been made available by the management accountant. Annual production and sales (units) Sales Revenue Direct Material Direct Labour Production Overheads Non-Production Overheads Profits/(Losses) 10,000 1,800,000 400,000 500,000 500,000 820,000 (420,000) 15,000 2,700,000 600,000 750,000 550,000 820,000 (20,000) 20,000 3,600,000 800,000 1,000,000 600,000 820,000 380,000 25,000 4,500,000 1,000,000 1,250,000 650,000 820,000 780,000 All of the above costs can be classified as either fixed, variable or semi-variable. Selling price and costs have also been stable over the last few years and are expected to remain so in the foreseeable future. REQUIRED (a) Calculate how many units of the electronic component should Bara Co. produce and sell in order to make: i. ii. Neither a profit nor a loss A target profit of 450,000 [8 marks] (b) Assume that last year, Bara Co. produced and sold 21,000 units. A strike for the current year has caused a materials shortage and it is expected that the current year's sales can only reach 19,000 units. Due to lower production and sales, total fixed costs can be reduced by 100,000. Given that the company has already sold 15,000 units this year at 180 per unit, by how much does the contribution per unit need to rise on the remaining units to be sold to match the profit level of last year? [7 marks] (c) Critically discuss how management can use "Cost-Volume-Profit" analysis to support decision making in a company such as Bara Co. You should use relevant examples and any supporting calculations to illustrate your answer. [600 words maximum) [10 marks]