Brass Ltd produces two products, the Masso and the Russo. Budgeted data relating to these products on a unit basis for August are as follows:

Each unit of product incurs costs of machining and assembly. The total capacity available in August is budgeted to be 700 hours of machining and 1000 hours of assembly, the cost of this capacity being fixed at £7000 and £10 000 respectively for the month, whatever the level of usage made of it. The number of hours required in each of these departments to complete one unit of output is as follows:

Under the terms of special controls recently introduced by the government in accordance with EEC requirements, selling prices are fixed and the maximum permitted output of either product in August is 400 units (i.e. Brass Ltd may produce a maximum of 800 units of product). At the present controlled selling prices the demand for the products exceeds this considerably.
You are required:

(a) to calculate Brass Ltd’s optimal production plan for August, and the profit earned;

(b) to calculate the value to Brass Ltd of an independent marginal increase in the available capacity for each of machining and assembly, assuming that the capacity of the other department is not altered and the output maxima continue to apply;

(c) to state the principal assumptions underlying your calculations in (a) above, and to assess their general significance. 

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Selling price Materials Salesmen's commission Masso Russo (3) () 150 100 80 30 88 30 20