Taste of Earth Sdn Bhd produces various types of fruits smoothies' drinks. One of the fruits smoothies' drinks that has a stable demand is Tropical Mango Smoothies which is currently sold at RM8.00 per cup. The company produces 50,000 cups of Tropical Mango Smoothies and normally incurred a total production cost of RM6.00 per cup. The detail costs to manufacture 50,000 cups of Tropical Mango Smoothies are as follows: Direct materials Direct labour Total overhead (40% variable) Total cost RM 100,000 75,000 125,000 300,000 Currently, there is an increase in market demand of a new flavoured smoothies which is Chocolate Banana Smoothies. The company is considering to sell this new flavoured smoothies and the management team has done some market research. The total research cost that has been incurred was RM9,500. Based on the research, the company is confident in penetrating the market and has forecasted that they can sell 20,000 cups of Chocolate Banana Smoothies next year. The estimated selling price is RM10 per cup. However, due to shortage of machine and labour capacity, the top management suggests two proposals in making the decision. Proposal 1 The company will buy a ready-made Chocolate Banana Smoothies from supplier and repack under their own brand name. The following costs are expected to be incurred: Costs of buying Costs of repacking Transportation cost Other expenses Proposal 2 RM 3.00 per cup 1.00 per cup 30,000 20,000 The company will produce Chocolate Banana Smoothies. However, the production of Chocolate Banana Smoothies will decrease the production of Tropical Mango Smoothies by 40% of its normal production in a year. The information related to production of Chocolate Banana Smoothies is as follows: Direct material Direct labour Variable overhead RM2.50/cup RM1.50/cup RM1.00/cup Total fixed production overhead of the company will be reallocated and a sum of RM7,000 is allocated to the production of Chocolate Banana Smoothies. Required: a. Calculate the contribution margin loss from Tropical Mango Smoothies if the company decided to produce Chocolate Banana Smoothies. (3 marks) b. Compute the total cost per year incurred for each of the proposal. (12 marks) C. Advise the best proposal to be adopted by the company. (2 marks) d. List any FOUR (4) qualitative factors that the company needs to consider in making decision in part (c) above. (4 marks) (Total: 21 marks)