Body Products Division of World Wide Drugs Ahmed Diba is thecontroller of the Body Products Division of World Wide Drugs (WWD).It is located in Winnipeg, which is the headquarters of WWD. Dibais helping develop a proposal for a new product to be called VitalHair. This product is a cream to be rubbed on the scalp to restorehair growth. Cheryl Kelly, president of the division and Diba arescheduled to make a presentation to the WWD executive committee onthe expected profitability of Vital Hair. The fixed costsassociated with the development, production and marketing of VitalHair are $24,000,000. Each customer will pay a doctor $96 permonthly treatment, of which $66.00 is paid to WWD. Diba estimatesWWD’s variable costs per treatment to be $26.40. Included in this$26.40 is $9.60 for potential product litigation costs. Kelly islivid at Diba for including the $9.60 estimate. She argues that itis imperative to get the R and D funds approved (and quickly) andthat any number that increases the breakeven point reduces thelikelihood of the Vital Hair project being approved. She notes thatWWD has had few successful lawsuits against it, in contrast to somerecent “horrendous” experiences of competitors with breast implantproducts. Moreover, she is furious that Diba put the $9.60 amountin writing. “How do we know there will be any litigation problem?”She suggests Diba redo the report excluding the $9.60 litigationrisk cost estimate. “Put it on the chalkboard in the executivecommittee room, if you insist, but don’t put it in the report sentto the committee before the meeting. You can personally raise theissue at the executive committee meeting and have a full and frankdiscussion.” Diba takes Kelly’s “advice”. He reports a variablecost of $16.80 per treatment in the proposal. Although he feelsuneasy about this, he is comforted by the fact that he will flagthe $9.60 amount to the executive committee meeting in hisforthcoming oral presentation. One month later, Kelly walks intoDiba’s office. She is in a buoyant mood and announces she has justcome back from an executive committee meeting that approved theVital Hair product proposal. Diba asks why he was not invited tothe meeting. Kelly says the meeting was held in Toronto, and shedecided to save the division money by going alone. She then says toDiba that it “was now time to get behind the new venture and helpmake it the success the committee and her team members believe itwill be.” Required 1 – What is the breakeven point (in units ofmonthly treatments) when WWD’s variable costs (a) include the $9.60estimate? (b) exclude the $9.60 estimate for potential productlitigation costs? 2 – Should Diba have excluded the $9.60 estimatein his report to the executive committee of WWD? Explain youranswer. 3 – If you were Diba, what would you do in response toKelly’s decision to make the Vital Hair presentation on her own?Explain in paragraphs.