e QUESTION 1 Desk Space Limited manufactures three different types of office desk. Desk A has extra drawers, Desk B has a printer shelf and Desk C has a moveable footrest. In the company's present factory, space is limited and there is a restriction on the number of machine hours available. The directors have considered moving to larger premises, but are unwilling to make the move just at the moment because of fears of a downturn in the office furniture market. Costs and selling price information per unit for the financial year 1 January to 31 December 2020 for each type of desk is as follows: Desk A Desk B Desk Ce+ Selling price per unite 500 480 520- Variable materials costs Wood and plastics 120- 116 130 Screws and fixings 5 5e 52 Variable labour costs 542 482 52 Variable machine costse 162 12- 14 Share of fixed costs 75 74 70- Machine hours required per unit 1.5 hours 1.5 hours 1.6 hours Sales demand in units for 2020- 2,200 2,780 2,500- e T.T.T.T. There is a maximum of 6,000 Machine hours available during 2020. Fixed costs for 2020 are expected to be 920,000.- Required: A) Calculate the number of units the business would need to sell to break even if it were to produce only Desk C in 2020. (Assume for this that there is no effective limit to market size and resource availability) 4 marks B) D) Advise the directors of Desk Space Ltd. on the combination of products that should be manufactured if the business is to produce the highest profit without further expansion of the premises. 10 marks ii) Show a profit statement for Desk Space Ltd. if your recommended production plan in () is followed. (Round to nearest unit/pound where necessary). 4 marks C) State the maximum price/unit that Desk Space Ltd. would be prepared to pay to have the remaining units of Desk C machined by a sub-contractor and from that calculate the total cost. Explain your reasoning. 3 marks D) The directors of the company are concerned about the current machining restrictions. Outline steps they could take to increase the level of contribution for the business. 4 marks