Question 2 Senah International Ld manufactures and exports an engine for carpet cleanen "Snooper are given below The budgeted cost and revenue data for the first haif of the year 2017 for the Sales (40,000 units) Less Cost of goods sold Gross margin Less: Operating expenses Operating income RM 1,600,000 1.120,000 480,000 100,000 Cost of goods sold consists of RMS10,000 of variable costs and RM310,000 of lixed costs Opgrating expenses.consist of RM30,000 of variable costs and RM70,000 of fixed costs Senah International Lid received the following proposals to be implemented in the second i. To accept an order for 6,000 units from Leman Corporation. There will be no increase in half of the year 2017 fixed costs, but variable costs will be reduced by RM1 per unit due to economies of scale. The company has sufficient capacity if it were to accept the order ii. To undertake Transformation program which aims to increase sales units by 10 percent from the first half. This is to be achieved by reducing the selling price by 3 percent and investing an additional RM 19,500 on advertising. The management is considering implementing only one of the proposals Required 1) Prepare contribution income statement for the first half of the year 2017 2) Calculate the unit contribution margin and contribution margin ratio (CMR) for Spooper 3) Caleulate the break-even point in unis and Ringgit Malaysia (RM) for the first halif of 4) Calculate the safety margin (in RM) for the first half of the year 2017. Briefly explain 5) For each of the proposals, i.e. accepting an order from Leman Corporation and (3 marks) (3 marks) (3 marks) first half of the year 2017 the year 2017. Use CMR in your computation. what do you understand by the "safety margin" in this context. (4 marks) will there be any change in the breakeven point? If there is, what is the direction of the change? Why? (No computation is required) undertaking Transformation: i. (4 marks) i evaluate its impact on the operating income. Show your computation. (4 marks) Refer to your answer in requirement 5(i) and 5(ii) above. Advise Senah International Lt which proposal to be implemented in the second half of the year 2017. Explain you (4 mark (Total: 25 mark