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Lexington Ltd Lexington Ltd manufactures collectible toys related to new film releases and sells them to a loyal customer base. In the coming year, the company plans to sell 20,000 P1 toys, which is the maximum demand for this type of product. Demand has been declining in the last three years. The variable cost and selling price data for the P1 is as follows: Product Pl Materials per unit Labour (1 hour per unit) Variable overheads per unit Total variable costs Selling price 18.00 10.00 12.00 E40.oo E60.oo If Pl is manufactured, fixed overhead costs are predicted to be in the coming year. The management team, worried about the declining market, is considering expanding their operations by manufacturing two other types of film-related collectibles. These other products (P2 and P3) use different materials but the same type of labour as the current product range. Data are as follows: P2 Demand 10,000 units Materials per unit Labour (0.5 hours per unit) Variable overheads per unit Total variable costs Proposed selling price 10.00 5.00 7.00 E22.oo E34.oo P3 Demand 12,000 units Materials per unit Labour (0.75 hours per unit) Variable overheads per unit Total variable costs Proposed selling price 15.00 7.50 10.00 E32.50 E49.oo Fixed overhead costs are predicted to increase by per year as a result of adding new products. Labour hours are in short supply and are predicted to be 25,000 hours in the coming year. Required (a) (b) (c) (d) Calculate the breakeven point in number of units, and the profit or loss in E assuming the company manufactures product P1 only. Prepare a production plan for all three products (in units) that makes the best use of the labour hours available. Calculate the profit or loss that the company will make after adopting the production plan in (b) above. Present your results for (c) showing contribution from each product, contribution in total, and total fixed overhead costs. To overcome the problem with the labour shortage the company is considering outsourcing the manufacture of one or more of the products. Lucy, the managing director of Lexington Ltd and a CIMA qualified accountant, has identified a suitable company for outsourcing the manufacture of Product P2. This company is owned and operated by Lucy's brother, William. William has recently offered to take Lucy and her family on an all-expenses- paid holiday to Florida because his company has made a lot of profit this year. Describe what is meant by each of the following three CIMA ethical principles: integrity, objectivity, and professional behaviour; For each of the principles you have described in (i) above, explain how they might apply to the outsourcing decision taken by Lucy, and suggest actions that Lucy might take to avoid breaching the principle. (5 marks) (12 marks) (8 marks) (15 marks) (Total 40 marks)