QUESTION 1 Hyde Limited makes one product and its factory has the capacity to produce 40 000 units of that product a year. The budgeted statement of comprehensive income for next year is as follows: 3 3 Sales. @$15 per it (30 000 units) 450 000 Expenses Direct materials 90 000 Direct wages 120 000 Production Overheads: Variable 12 000 Fixed 50 000 Distribution Overheads Variable 36 000 Fixed 20 000 328 000 Profit for the year 122 000 It can be assumed that the variable costs will vary directly with charges in volume and that fixed costs will remain fixed throughout the proposed volume range. All production can be sold at once and there is no need to maintain any stocka. Required: 2) Consultants have suggested the following alternatives to the budget plans for next year i. If the price per unit is reduced by 10%, it is expected that the company would be able to produce at fall capacity ii. If the product packaging is improved at a cost of $0.50 permit it is amticipated that the sales volume could be increased by 20% In each case, calculate the revised profit which is anticipated will result from the suggestions (16 marks) b) The company also has the chance to tender for a special order of 5 000 units. This order would not affect the other sales which would continue as before. No variable distribution costs would arise on this order since the buyer would collect directly from the factory Calculate for the directors: i price per unit to be quoted if it is desired to just break-even on this additional business. ii The price per unit to be quoted if it is desired to produce a contribution of 323 000. (9 marks)