Chucarawa Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 30000 hours per year. Information on the three types of storage units is as follows:

	BASIC	STANDARD	DELUXE
Selling price	$25.00	$40.00	$50.00
Variable cost	$15.00	$20.00	$25.00
Machine hours required	0.50	0.75	0.80

Chucarawas marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce.

REQUIRED:

1. If you were the management accountant of the company, how many of storage unit (s) should be produced and sold to maximise the companys profit margin? (3 marks)
2. Now suppose that Chucarawa Company believes that it can sell no more than 20 000 of the basic model but up to 10 000 and 15 000 each of the deluxe and standard models at the selling prices estimated. What product mix would you recommend, and what would be the total contribution margin? (5 marks)
3. What qualitative factors you should consider before making the decision to sell the product as your calculation in (2)? Give two factors and suggestion (if any). Justify your answers (2 marks)