Section C Answer 1 question from this section. All questions carry the same mark. Total in this section is 30 Marks. Question 12 MDG Ltd makes a standard model of headsets, which it sells to retailers for 60 each. Next year the business plans to make and sell 20,000 headsets. The business's costs are as follows: Manufacturing Variable materials Variable labour Other variable costs Fixed cost Administration and selling Variable Fixed 20 per headset 14 per headset 12 per headset 80,000 per year 3 per headset 60,000 per year The management of MDG Ltd has little knowledge about management accounting and Required: a) What is meant by the Break-even point (BEP) for an activity? How is it calculated? Explain why MDG Ltd should know the BEP. (8 marks) b) Calculate the BEP for next year, expressed both in quantity of headsets and sales value. (6 marks) (5 marks) d) Calculate the margin of safety for next year, expressed both in quantity of headsets and sales (5 marks) value. e) Compare and contrast the incremental budgetary approach to the zero-base budgeting approach to budgeting. (6 marks) (Total: 30 marks) Birkbeck College 2021/22 Page 9 of 12