Question 3 The following is PKPLagi Sdn Bhd contribution format income statement for last month: Sales Variable expenses Contribution margin Fixed expenses Net operating income RM 1,400,000 (900,000) 500,000 (300,000 200,000 The company has no beginning or ending inventories and produced and sold 10,000 units during the month. Required: (a) Without resorting to any computation, determine the total contribution margin (CM) at break-even point. Explain your answer. (2 marks) (b) Determine the company's break-even point in units using formula method. (2 marks) (c) If sales increase by 100 units, compute by how much should net operating income increase. (2 marks) (d) How many units would the company have to sell to attain target profits of $225,000? (4 marks) (e) The marketing manager is proposing to the management of PKPLagi to increase the advertising expenses by RM100,000. He expects this change his will lead to an increase of total sales by 25%. i) Using the CM ratio computed in (a) and without preparing a new set of income statement, compute the new net operating income (or loss) after the changes. (6 marks) ii)Explain whether the company should accept or reject the proposal from the marketing manager (2 marks) (1) Explain the term 'degree of operating leverage and how it is computed. (2 marks)