The Solutions Shop sells a popular business computer package for $300 per package. The following current information is available. Variable costs per package: Amount payable to the supplier of the package $200 Sales commission $25 Delivery costs $5 $230 Annual fixed costs: Rent S5 200 Manager's salary $36 000 Insurance $800 $42 000 Required a b & Calculate the contribution per unit of the business at present. What is the importance of this figure? Calculate the number of packages the business must sell in a year to break-even. Assuming the selling price per unit and the cost structure of the business remain as they are at present, how many packages would the business need to sell in a year to make a profit of 898 000? Given recent trends, the business expects to sell only 1 800 packages in the next year. Assuming the selling price per unit and the cost structure of the business remain as they are at present, determine the expected profit of the business for the next year. What is the margin of safety at this level of activity? The manager is not happy with the projected profit figure. She believes that if the selling price is reduced to $290 per package, and 518 000 is spent on advertising during the year, the number of packages sold will be 2 600. With supporting calculations, explain whether the manager's plan should be adopted. Refer to the new breakeven point in your answer. Assume the suggestions in (e) are approved. The manager makes another suggestion to the owners of the business. She proposes that her annual salary be reduced to $20 000 but that as an incentive she be paid $8 for every package sold by the business. Should this option be adopted? (In answering this question, assume first that units sold would not be affected by this change. Then consider the possibility that units sold would increase because of the extra motivation given to the manager.) *) f B Assume the cost structure at the beginning of the question. The local university wants to provide the package to each of its MBA students. It makes a special one-off offer to buy 200 of the packages at a price of $280 per package. If accepted, no sales commission will need to be paid on this sale, and the university agrees to pay the delivery costs. Other costs remain the same. With supporting calculations, explain whether this offer should be accepted Holland Lid, a competitor of the Solutions Shop, sold 3000 of the computer packages last year at $280 per package and made a profit of $60 000. This year the costs of Holland Lid remained the same, it sold 4000 packages at $275 per package, and made a profit of S100 000. Determine the total fixed costs per year and the total variable cost per unit of Holland Lid