DO E AL Av E 1E AaBbCcDdE ABECOME AaBbCcDc AaBb Normal No Spacing Heading 1 Hear Question 3 (20 marks Rainbow Farmers in Central Otago manufactures apple cider. The following data is provided regarding the company's operations: --- Bottles of apple cider produced and sold 280,000 units Sales revenue Variable manufacturing expense Fixed manufacturing expense Variable selling and administrative expense Fixed selling and administrative expense Net operating income $2,072,000 $1,134,000 $436,000 $238,000 $164,000 $100,000 Required: I a. Determine the company's break-even in unit sales. Show your calculations. (5 marks) b. What does operating leverage actually measure? Also, determine the company's degree of operating leverage. Show your calculations. (5 marks) c. Natasha Ibrahomovich, a fresh graduate, has recently joined as an investment analyst at a small investment company. At a recent departmental meeting, she came to know that her company was considering to invest in Pizza Hut and Mercedes-Benz. At the end of the meeting, her line manager, Megan Kelly, asked her to prepare a report describing the potential operating leverage structure of both Pizza Hut and Mercedes-Benz. Imagine yourself as Natasha and prepare the report. [Hints: You should comment on which company will have low or high operating leverage, and why.) [Maximum word limit: 250 words.) (10 marks) The End