Question 3 Gwiad Ltd manufactures a single product which has the following budgeted cost structure per unit, based on a production budget of 10,000 units. Materials - 6kg at 6/kg Direct labour - 12 hours at C10/hour Variable Manufacturing Overheads (12 hours at 2 per hour] Variable Selling and Distribution Overheads Other costs incurred by the company are: 36 120 24 4 Factory fixed overheads Selling and distribution overheads Fixed administration overheads 300,000 200,000 200,000 The selling price of the unit is 284,5" Required: a) Calculate how many units would have to be sold for the company to break even. (2 marks) b) Estimated sales for next year is 17,000 units but instead of selling the units themselves the company could decide to sell all units to a wholesaler. This will save all the selling and distribution overheads and reduce the administrative overheads by 38,000. Determine the minimum price per unit the company would accept from the wholesaler. (4 marks) C) Discuss what other factors Gwlad Ltd needs to consider before going ahead with the option in part (b). You may assume that the estimated sales are accurate. (4 marks) Total 10 marks Page 5 of 12