Q.4.1. Dontrumnomo Co. is thinking about modernising its very old factory producing premium head cover. It now sells its premium head covers for RM500 each. At 10,000 units of production, the details for the costs are:

At 10,000 units	RM
Direct raw materials	1200000
Direct labour	800000
Variable manufacturing overhead	700000
Fixed manufacturing overhead	450000
Variable selling and administrative expense	1100000
Fixed selling and administrative	530000

Q.4.1.a. Calculate the breakeven quantity. (6 marks) Format : 9996

Q.4.1.b.i. If the proposed modernisation is carried out, the new factory would have 60% additional fixed costs per year, but its variable costs would decrease by RM30 per unit. What would be the new break-even point now? 

Q.4.1.b.ii. Referring Q.4.1.b.i., if the company wanted to maintain the previous breakeven quantity as per operation of the old factory, what NEW price would it have to charge for a premium head cover? 

Q.4.1.c. If sales are projected to reach 30,000 units per year in the near future, would you recommend the construction of the modern factory? Why or why not? Show ALL your calculations in the workings to be attached. (Assume that both old and modern factories have the capacity to produce this quantity and the selling price remains the same).