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(b) Further investigation into the nature of fixed costs has shown that some of those shown in the original budget are incurred as a direct result of providing specific services as follows: The remaining fixed costs are costs which would be incurred regardless of the type and number of services provided. BLG Ltd entered into a three year contract in December 20X1 which requires it to provide 500 units of service G per year or suffer significant financial penalties. These services are included in the budgeted demand. Required (i) Evaluate the viability of each of the three products individually and from the company’s perspective. (5 marks) |