economics

02. {a} Newburglur Fastenings produce two ldnds of specialized machine components, 31th and 310'.\" for which demand exceeds capacity. The pmductlon costs for the two pmducts are given in the table below: 51 [IT per per component component Materials in Kg {at so per Kg} outer variable costs {1 2 Labour in I'IDIJIS 2 3 {at 1 per hour] - 5 The selling prices of the two products are t?! per unit and 5? per unit respectivelv. The production manager has stated at the monthly.r review meeting that there will onlv oe 4,5 kg of material and 4,0130 labour hours available next month. The company.r works on Justin Ime manufacturing so holds no stocks and it wishes to maximize its prot. How should the manufacturer arrange the production for next month in orderto maximize contribution to prot? Determine the optimum level of contribution to profit. (15 marlcs] {b} The following month the cost of labour increases to 8 per hour but in all other respects the problem is unchanged. Determine how the production schedule changes. Discuss how the production schedule would change if the cost of labour continued to increase in the future, but in all other respects the problem is unchanged. (1o marlcs]