QUESTION 2 Fit-Life Equipment Sdn. Bhd. is a manufacturer of exercise machines for home use and fitness centers. One of the most popular fitness machine is it's treadmill machine model PRO9000. Details of the selling price and related cost of PRO 9000 is as follows: Recently, a competitor selling the same type of exercise/equipment is planning to introduce a similar type of treadmill that will sell for RM3,650 per unit, Fit-Life Equipment Sdn. Bhd. is concerned about the competitor's pricing and is wondering if Fit-Life can lower it's selling price to RM3,650. The marketing manager is confident that the lower price will increase sales by 25% per year. The Production Manager estimates that production cost will increase by 25% with same level of fixed cost. Fit-Life Equipment Sdn. Bhd. currently sells all the model PRO9000 that it produces. Required: a) Compute the annual operating income from model PRO9000 at the current selling price of RM4,800 per unit. (5 marks) b) Predict the annual operating income from PRO 9000 if the price is reduced to RM3,650 and sales in units increased by 25%. (5 marks) c) Compute the target cost per unit for the new price if target operating income is 30% of sales. (4 marks) d) Based on your computation in (b), show the unit production cost for one unit of PRO9000. (3 marks) e) Compute the difference - "cost gap" between the target cost per unit in (c) and the unit production cost for one unit of PRO 9000 computed in (d)? (1 marks f) Discover what should Fit-Life Equipment Sdn. Bhd. undertake to close the cost gap. 2 mark TOTAL: 20 MARK