student number ends with 7

QUESTION 2 A business produces one single product. The annual fixed costs of operating the factory are X. Each unit of product requires direct materials that cost Y and requires 2 hours direct labour at the rate of 4 an hour. The finished product is sold for 11,000 units at Z each. The business has the opportunity to rent a machine. Doing so would increase the total annual fixed costs to 170,000. Using the machine would reduce the labour time to 1 hour at the same existing rate. Student number 5 digit 50 or 1 or 2 or 3 150,000 15:40: or 5 or 6 130,000 or 8 or 9 180,000 1 Required: - (a) Under both situations, without and with machine, calculate the following: - number of units of product the business needs to sell in order to achieve a target profit of 60,000 per annum (5 marks) annual net profit of the business. (8 marks) (b) (iii) break-even point in units. (5 marks) Critically analyse whether the business should rent the machine. (7 marks) (Total: 25 marks)