15 Burco Ltd produces and sells two products: X and Y. During the last year, 700 hours were worked and the operating results were as follows: OTA Units sold 1000 1000 2000 10000 20 000 30 000 5000 9000 Sales Variable costs: Labour Materials Total variable costs Contribution margin Fred costs Net profit 2000 5500 7500 2 500 7000 14500 21500 8500 14000 6000 6000 2500 Y ACCOUNTING RE GA BELES All variable costs are a linear function of output. The material used for Xis quite different from that used for Y, but both can be produced with the same labour force. Five units of X can be made in one labour hour, while only two units of Y can be made in one labour hour. Labour hours are expected to be limited to 800 next year. Information about the market for X and Y for the next year is set out below: 1100 1200 Maximus cuantity that can be sold 600 800 munguantit that must be a Assuming that plant capacity is fully used, what is the optimum mix of X and Y? b Assuming that the price of material for Y decreases by 20 per cent, what is the optimal mix of X and Y? Assume no change in the price of X or Y. c Assuming that the cost of labour increases by 20 per cent, that prices can be put up by only! 10 per cent without affecting sales limits and that the number of labour hours available is reduced to 600, what is the optimal mix of X and Y? d What is the net profit in each of these three cases? e Discuss the limitations of your analysis. 16 Eatinatural Ltd specialises in the manufacture and sale of health foods. The company has just laboran The budget derived