16. a) ABC ltd company produces three products and is reviewing the production and sales budgets for the next accounting period. The following information is available for the three products: Product P Product Q Product R Selling price 1,200 600 200 Labour (20 per hour) 600 320 Other variable costs 180 (780) 136 (456) 80 80 28 Contribution/unit 420 144 (108) 92 Maximum demand 200 600 1,000 Required: i. Labour hours are strictly limited to 10,800 hours in total. Calculate the optimum product mix and the maximum contribution. ii. A special contract requires 3,500 labour hours. What is the relevant cost of obtaining these hours? b) ABC presents you with information relating to another product X. 15 marks Material Labour (2 hours @ 3.50) Variable production overhead Fixed production overhead Total 2.50 7.00 2.00 1.50 13.00 Assume that labour is in short supply and is used for other product Y which generates a contribution of 6.50 per unit and requires 3 hours of the same labour. What is the minimum price to charge for product X? Show your workings. 10 marks