The management of a business is concerned about its inability to obtain enough fully trained labour to enable it to meet its present budget projection. Service: Alpha Beta Gamma Total 000 000 000 000 Variable costs Materials Labour Expenses Allocated fixed costs Total cost Profit Sales revenue 663 6248 24 15 39 1626222 4 15 27 29 522228 15 12 27 7 12 33 31 82 19 33 101 The amount of labour likely to be available amounts to 20,000. All of the variable labour is paid at the same hourly rate. You have been asked to prepare a statement of plans ensuring that at least 50 per cent of the budgeted sales revenues are achieved for each service, and the balance of labour is used to produce the greatest profit. Required:

(a) Prepare a statement, with explanations, showing the greatest profit available from the limited amount of skilled labour available, within the constraint stated. Hint: Remember that all labour is paid at the same rate.

(b) What steps could the business take in an attempt to improve profitability, in the light of the labour shortage?

AppendixLO1