Divine Electronics Ltd. manufactures a line of headphones. Sales are increasing, and management
is concerned that the company may not have sufficient capacity to meet the expected demand for the
coming year. The following data are available for planning purposes:
	Product	Estimated Demand Next Year	Selling Price	Direct Materials	Direct Labour
	1 Wire	75,000	$25.00	$6.20	$6.00
	2 Wire	125,000	22.50	5.40	3.00
	3 Wire	115,000	15.00	4.60	4.80
The following additional information is available:
1	With the strong competition, the company feels that it can't increase its selling prices above
	those indicated
2	The direct labour rate is $12 per hour; this rate is expected to remain unchanged during the coming
	year.
3	Fixed manufacturing costs total $640,000 per year. Variable manufacturing overhead costs are
	equal to 20% of direct labour costs.
4	The company's plant has a capacity of 95,000 direct labour-hours per year on a single-shift
	basis. The company's present employees and equipment can produce all three products.
5	The company's current inventory of finished products is nominal and can be ignored.
6	All of the other company's nonmanufacturing costs are fixed.
REQUIRED:
a.	How many units of 1 Wire, 2 Wire and 3 Wire can be produced based on the constraint? (16 marks)
b.	What is the total contribution margin for the company based on your calculations in a)? (4 marks)