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A company is planning to produce products A, B, C and D in order to satisfy market demand as per the following schedule: Product Market

A company is planning to produce products A, B, C and D in order to satisfy market demand as per the following schedule:

Product

Market DD

A

14,000

B

8,000

C

12,500

D

6,000

The unit cost statement for these products is as follows:

A

B

C

D

Selling price

480

250

400

800

Variable costs:

Direct materials @ ksh 30 per kg

180

90

150

120

Direct labour @ ksh 10 per hour

140

60

80

250

Variable overheads

30

50

70

150

The management is aware that direct labour is currently in short supply and only limited amount of 350,000 hours can be availed.

Required:

Calculate the optimal contribution given the information provided.

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