Master Inc. is a leading producer of glass panels for the construction    industry. The annual income statement of Master Inc. for year ended 31 December 2021 were as follows:

Required: ( Treat each case independently)

1) Compute the break-even point in units and in sales dollars . What is the current margin of safety in sales dollars. ( 8 marks)

2) If Master Inc. believes that they are able to earn a targeted profit of   $1,500,000 next year, how many glass panels must they sell to achieve this target. (2 marks)

3) Using the answers in Q1 and Q2, explain why cost-volume-profit analysis can be useful to management for planning and decision    making. (4 marks)

4) In order to improve its profitability, the accountant in Master Inc is proposing a 5% reduction in the selling price because he believes it will lead to a 25% increase in number of units sold.   Assume fixed costs remain unchanged, should Management accept this proposal?  Explain clearly with workings. (4 marks)

5)  For  2022,  Management  is  proposing  to  export  its  glass  panel  to Indonesia.  As  a  trial  for  the  initial  expansion,  Master  Inc  will  incur additional annual fixed expense of $120,000. Direct materials is expected to  increase  by  $10  but  no  sales  commission  will  be  paid  for  sales commission.

How many glass panels must be sold to Indonesia if Master Inc wants to maintain its current profit level as a whole assuming that all other revenue and costs remain unchanged. (4 marks)

6) Master Inc. is also exploring the possibility of investing in a   company, Force Frame Pte Ltd. Force Frame Pte Ltd has furnished the following records of the total overheads and the number of machine hours over a 6 months period in  2021.

The components of October’s total overhead costs were as follows: