- marks as per question) QUESTION 1 (25 MARKS] Bradford Machine Parts Inc. manufactures industrial bearings. One of its fast selling products is the pillow block bearing. Last year it sold 40,000 units with the costs given below. Sales (40,000 units) Variable expenses Contribution margin Fixed expenses Net income (loss) $1,000,000 700,000 300,000 360,000 $(60.000) Required: (a) What is the breakeven in units and sales value for the pillow block bearing? (6 marks) (b) The management needs to take some steps to make this a profit making product. There is a market for this product and if the company is able to reduce variable costs by $2,50 per unit in 2020 and reduce its fixed costs by 1/4" of its current cost, other costs and unit revenues remain unchanged. How many units will the company have to sell in order to earn a net income of $45,000? 17 marks) (c) What would be the margin of safety in units and percentage at expected sales found in part (b) above? (5 marks) (d) Management has another option to improve the quality of the product that would add to Sl to the variable costs, and the selling price could be increased by $2.5 per unit. What would be the required sales in units to break-even? (7 marks)