CSB Records is planning to release a new Michael Johnson album called "Mad". The album can be released as a tape recording, or as a compact disk (CD), or as both. Although later impressions can be made, CSB is currently concerned with the first release, and wishes to use the coming week's production capacity for running off this first release. Future weeks' capacity has already been committed for other albums. Some financial details follow: Tape CD Wholesales selling price/album $8.00 $20.00 Costs: Direct materials/album 1.00 2.00 Variable operating costs/album 1.00 2.00 Royaltie to Johnson/album 1.00 1.00 Fixed labour and overhead costs per week are $50 000 regardless of whether Tapes or CDs or both are produced. Current copying capacity is either 80 000 Tapes or 10 000 CDs per week, or a linear combination of the two. It is believed that consumer demand for Tape or CD versions is not affected by the form in which the album is released. Maximum demand for the first release is estimated to be 50 000 Tapes and 5000 CDs.

Required: (a) What is the unit contribution margin for Tape and CD versions of the album? (10 marks)

(b) If there are no costs other than those already mentioned, and CSB wish to produce and sell the album in the ratio Tape:CD = 9:1, how many of each type should CSB plan to produce in the coming week to earn a net profit of $190 000 on the first release? (10 marks)