Second Issue: Gulf Company in one of its plants provides products to small retailing businesses. There are three levels of product: the 'Basic', the 'Standard' and the 'Full Option'. The company plans next year to work at absolute full production capacity. Managers believe that the market will not accept more of any of the product three levels at the planned prices. The plans are: The plant's fixed cost totals SR 660,000 a year. Each product takes about the same length of time, irrespective of the level. One of the financial department staff has just produced a report that seems to show that the Standard product is unprofitable. The relevant extract from the report is as follows: Standard product cost analysis The writer of the report suggests that the company should not offer the Standard product next year. The report goes on to suggest that, if the price of the Basic product were to be lowered, the market could be expanded. Required: A. Do you agree with what the writer presented in his report? B. Should the Standard product be provided next year, assuming that the quantity of the other products could not be expanded to use the spare capacity? C. Should the Standard product be provided next year, assuming that the released capacity could be used to provide a new product, the 'Nova', for which customers would be charged SR 75 per unit, and which would have a variable cost of SR 50 per unit and take twice as long per unit as each the other three products? D. What is the minimum price that could be accepted for the Basic product, assuming that the necessary capacity to expand it will come only from not providing the Standard product? Project in Managerial Accounting for Managers - ACCT-612 The board of directors of Gulf Company is in the process of making decisions related to the following two issues, and in your capacity as the company's management accountant, the Board assigned you to submit two reasoned reports in which you advise the Board to take the appropriate decisions: First Issue: There are two mutually exclusive investment projects, Both projects are concerned with the purchase of new plant. The following data are available for each project: If you know that the discount rate is 10 per cent. Neither project would increase the working capital of the business. The business has sufficient funds to meet all investment expenditure requirements. Required: The board of directors request you to prepare a report advising them to take appropriate investment decision. Therefore, in light of Long-term investments appraisal methods you studied, prepare a report in which you advise the company board of directors to prefer one of the mentioned two investment opportunities