Z Ltd manufactures and sells three products with the following selling prices and variable costs: Product A ($/unit) Product B ($/unit) Product C ($/unit) Selling price Variable cost 3.00 1.20 2.45 1.67 4.00 2.60 The company is considering incurring an expenditure on advertising and promotion for Product A. It is hoped that such expenditure, together with a reduction in the selling price of the product, would increase sales. The existing annual sales volume of the three products is: Product A Product B Product C 460 000 units 1 000 000 units 380 000 units If $60 000 per annum was to be invested in advertising and sales promotion, sales of Product A at reduced selling prices would be expected to be: 590 000 units at $2.75 per unit OR 650 000 units at $2.55 per unit Annual fixed costs are currently at $1 710 000 per annum. Required: a. Calculate the current break-even sales revenue of the business. b. Advise the management of Z Ltd as to whether the expenditure on advertising and promotion, together with selling price reduction, should be introduced on Product A. C. Calculate the required unit sales of Product A, at a selling price of $2.75 per unit, in order to justify the expenditure on advertising and promotion. d. Explain the term 'margin of safety', with particular reference to the circumstances of Z Ltd