You are a marketing manager at a company that manufactures and sells handmade jewelry.

Your company is considering participating in a sales carnival event held annually in your

city. The sales carnival attracts a large number of visitors, providing an opportunity for

businesses to showcase and sell their products.

Here are the details of the scenario for Cost$-$Volume$-$Profit $($CVP$)$ analysis.

Fixed costs:

$$ Booth rental: RM$500$ for the duration of the carnival.

$$ Marketing materials: RM$200$ for banners, flyers and promotional items.

$$ Staffing: RM$300$ for hiring extra personnel to manage the booth during the event.

Variable costs:

$$ Cost of goods sold: RM$10$ per piece of handmade jewelry.

$$ Sales commission: $10\%$ of the selling price for each piece sold at the carnival.

Selling price:

$$ The selling price of jewelry at the carnival is expected to be RM$30$ per piece.

Your task is to conduct a CVP analysis to determine the feasibility of participating in the sales

carnival. Consider the following assumptions for your analysis:

i$.$ Expected sales volume: $50$ to $200$ pieces of jewelry during the carnival.

ii$.$ Ignore any other overhead costs not mentioned in the scenario.

iii. Assume a linear relationship between sales volume and variable costs.

REQUIRED:

a$)$ Calculate the contribution margin per unit and the contribution margin ratio.

b$)$ Determine the breakeven point in units and sales revenue.

c$)$ Prepare a CVP graph showing the breakeven point and the profit$/$loss area.

d$)$ Analyze the sensitivity of profits to changes in sales volume.

e$)$ Based on your analysis, provide a recommendation on whether the company should

participate in the sales carnival and justify your decision.

f$)$ If the company wants to have a profit of RM$10,000$ how much unit sales should be

made?