Question Four: (20 marks) (B1, D4)

Part A: (12 marks)

Ahlia Industries developed the following information for the product it sells:

Sales price $50 per unit

Variable cost of goods sold $28 per unit

Fixed cost of goods sold $650,000

Variable selling expense 10% of sales price

Variable administrative expense $2 per unit

Fixed selling expense $400,000

Fixed administrative expense $300,000

For the year ended December 31, 2021, Ahlia produced and sold 100,000 units of product.

Instructions

1. Prepare a CVP income statement using the contribution margin format for Ahlia Industries for 2021. (8 marks)
2. What was the company's break-even point in units in 2021? (4 marks)

Part B: (8 marks)

Ahlia Technologies, which manufacturers high-technology instruments for spacecraft, is considering the sale of a navigational unit to a private company that wishes to launch its own communications satellite. The company plans to purchase 8 units, although it would also consider buying 16 units. Ahlia has started a chart relating labor time required to units produced:

Units Produced (X)	Time Required to Produce the Xth Unit
1	5,000 hours
2	4,500 hours
4	4,050 hours
8	?
16	?

Instructions:

1. Complete the chart by filling in the labor time required to produce 8 and 16 units. (5 marks) (show your calculations)
2. Assume that labor time costs $140 per hour. Compare the cost of production the 1^st unit to the cost of producing the 16^th unit. what is the percentage of the cost of the 16^th unit to the cost of the 1^st unit? (3 marks)