Question 3 a. Consider the following information for a given business. Sales revenue GHS 40,000 VC per unit = GHS 20 Activity level = 1,000 to break even Required: i. Determine the TFC.(1 mark) ii. Express the contribution as a percentage of sales. (1 mark) iii. The company plans to sell 1,500 units in the next period. What will be the percentage Margin of Safety (MOS)? (1 mark) iv. What margin should the business employ for planning purposes? (1 mark) What total profit should the business expect in order to achieve its planned sales? (1 mark) V b. SHATTA MOVEMENT Ltd produces a single product. The company's directors want to explore new markets, and they require an accurate analysis of the firm's cost structure for both forecasting and pricing purposes. An attempt to provide this analysis from the aggregation of individual costs has produced a poor correspondence between actual and predicted costs. You are an accountant employed by SHATTA MOVEMENT Ltd, and you have been asked to provide a statistical approach to the problem. The financial director has given you the following data: Ibrahim Anyass Ahmed 4 of 5 Period Output (units) Average unit cost (GHS) July 9.000 12.8 August 14.000 13 September 11,000 11.4 October 8,000 12 1 November 6,000 13 December 12.000 11.7 You obtain the following further information: The costs from which the averages have been computed consist of the firm's entire costs for the relevant month. Fixed costs can be assumed to be unaffected by seasonal factors except for harmattan heating. In July and August a supplementary heating system was employed; this cost GHS 10,000 per month to operate. Required: Estimate SHATTA MOVEMENT Ltd.'s normal fixed and variable cost of production using linear regression. (16 marks) TOTAL MARKS (21 M ARKS)