Tir Established in 1999, Seng Plastic Product Sdn. Bhd. (SENOPP) is now one of the leading manufacturers for plastic moulded products in Malaysia. SENGPP produces a moulded plastic casing, SPX605, and currently sells 200,000 units annually to producers of many mobile phones on the market. Seng Chua, president of the company, anticipates a 20 percent increase in the cost per unit of direct labour on January 1 of next year. He expects all other costs and expenses to remain unchanged. Seng Chua has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year. You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semivariable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 3,000 units. Current plant capacity is 210,000 units. The following are the current-year data assembled for your analysis: RM RM 15 3 1 Sales price per unit Variable costs per unit Direct materials Direct labour Manufacturing overhead and selling and administrative expenses Contribution margin per unit (60%) 2 09 9 RM1,000,000 Fixed costs Requirements: 2(a). Determine what increase in the selling price is necessary to cover the 20 percent increase in direct labour cost and still maintain the current contribution margin ratio of 60 percent