QUESTION TWO Mwapusuka Limited is a company that manufactures a single product which has the following cost structure based on a production budget of 10,000 units. Other information relating to the companys operations are: (i) The selling price of each unit is fixed at K129 (ii) Material cost (4kg @K3/kg) = K12 (iii) Direct labor (5 hours at K7/hour) = K35 Variable production overheads are recovered at the rate of K8 per direct labour hour. 4 Overhead Cost information: K Factory fixed overheads 120,000 Selling and distribution overheads 160,000 Fixed administration overheads 80,000 Required i. Determine how many units have to be sold for M limited to break even. [5 marks] ii. Calculate the sales revenue which would give a net profit after tax of K40, 000 assuming a tax rate of 20%. [5 marks] iii. Calculate the companys margin of safety if it desired to earn K80, 000 profit before tax. [5 marks] iv. If the company could buy in the units instead of manufacturing them, calculate how much it would be prepared to pay if estimated sales for next year are 10,000 units at K129 each; and all fixed cost reduce by half. [5 marks] v. Discuss the impact of operating leverage on the breakeven point and financial performance of a business entity. [5 marks]