Jean-Paul Cie (J-P) is a world-famous haute-couture fashion house based in Paris. It also manufactures a range of perfumes, all made from secret recipes. Only one ingredient called €˜maylarnge€™, a mixing agent, is used in all their products. Maylarnge is obtained from SML Laboratoire in Brussels and the quantity used varies with the particular perfume recipe. Due to temporary processing difficulties, SML has informed J-P that it can supply only ‚¬13,100 worth of maylarnge over the next three months. The budget below relates to the quarter in question under normal circumstances. The shortage of the mixing agent means that the budget will have to be revised.

Fixed costs for the quarter amount to ‚¬133,300 (including all wages and salaries).

Tasks:
1. What would the quarter€™s profit be if there was no shortage of maylarnge?
2. Calculate the profit for this period of shortage if the perfumes were manufactured in the order of their contribution per bottle until they ran out of maylarnge.
3 Calculate the revised sales budget and profit assuming J-P wishes to maximize its profit for this period of shortage.

Transcribed Image Text:

Perfume Passion Magique 6,500 Exotique Entice Sales volume (50 ml bottles) Variable costs per bottle 4,500 5,500 6,000 € € 1.20 2.60 Maylarnge Ingredients (as per recipe) Selling price 1.00 0.80 3.10 15.70 0.60 2.00 1.90 16.10 14.50 12.90