ABG Ltd manufactures three products, Alpha, Beta and Gamma, all of which are made

from one basic raw material.

Forecast costs and selling prices are as follows.

Product Alpha Beta Gamma

Sales per month (units) 9 000 12 000 7 000

$ $ $

Selling price per unit 72 74 58

Variable costs per unit:

Direct material 18 25 16

Direct labour 19 14 13

Variable overheads 14 13 12

The total fixed costs are $250 000 each month.

REQUIRED

(a)Calculate the contribution per unit for each product.

(b)Calculate the total monthly profit which can be achieved.

Due to a material shortage, ABG Ltd will only receive 80% of its material requirement

for the month of April 2019. No other shortages are expected.

REQUIRED

(c) Using the quantity of material that is available, a statement should be prepared to show the maximum profit that could be achieved for the three months ended 30 April 2019.

(d) ABG Ltd has received an enquiry for an additional order of 4000 units of Gamma at a special price of $50 per unit. Additional fixed costs of $25 000 would be incurred. Assuming no material shortage, calculate the profit or loss on this order.