Question 1 Impact clothes Plc produces a single product. The company's income statement for the year ended 31/12/2016, during which 90,000 units were produced and sold, was as follows 1,170,000 Sales (90,000 units) Materials Direct labour Factory overheads Administration expenses Selling expenses 390,000 236,000 82,000 130,000 105,000 943,000 Net profit 227,000 The materials, direct labour and 40% of the factory overheads are variable costs. Apart from the sales commission of 5% on sales, selling and administration expenses are fixed You are required to calculate: (a) The company's break-even point and margin of safety. (30 marks) (b) The number of units that must be sold in 2017 if the company is to increase its net profit (c) The profit the company would make in 2017 if it reduced its selling price to ???, (d) The selling price the company must charge per unit in 2017, if fixed costs increase by (e) List and explain two limitations / assumptions of marginal costing. (10 marks) by 20% over the 2016 figure assuming the selling price and cost levels and percentages remain unchanged. ( 20 marks) increased fixed costs by 15,000 and thereby increased the number of units sold to 110,000, with all other cost levels and percentages remaining unchanged. (20 marks) 12% but the volume of sales and the profit remain the same (20 marks)