Question 4 Sports Ltd. Is selling sports goods, Company is planning to sell 150,000 units of one of its products, in the next financial year. The selling price of a Product is OMR 20 per unit. Fixed cost for the period is OMR 400,000 and company is expected to earn a profit of OMR 500,000 Company has appointed a new production manager who is suggesting using an advanced production process. The fixed cost of the new process will be OMR 650,000. Company is expecting that variable cost per unit will reduce to OMR 6 per unit. Market competition is intense so selling price will remain the same as before. Production capacity of the advanced processes would be 150,000 units in the period which is same as before. REQUIRED: Calculate the following for the existing Process: (1) breakeven point in units. (4 marks) (ii) margin of safety in percentage (2 mark) (iii) contribution sales ratio. (C/S Ratio) (2 mark) (b) Showing the additional calculation Advise management if sale is 110,000 units, whether to change the production process. (6 marks) (C) Showing the additional calculation Advise management, how many units company should sell to make the advanced process more profitable than the existing process. If sale is 110,000 units, whether to change the production process. (6 marks) (d) Identify and explain 2 limitations of break-even analysis