Fisher Manufacturing Co. produces and sells its product AA100 to well-known cosmetics companies for $940 per tonne. The marketing manager is considering the possibility of refining AA100 further into finer perfumes before selling them to the cosmetics companies. Product AA101 is expected to command a price of $1,500 per tonne, and AA102 a price of $1,700 per tonne. The maximum expected demand is 400 tonnes for AA101 and 100 tonnes for AA102. The annual plant capacity of 2,400 hours is fully utilized at present to manufacture 600 tonnes of AA100. The marketing manager proposed that Fisher sell 300 tonnes of AA100, 100 tonnes of AA101, and 75 tonnes of AA102 in the next year. It requires four hours of capacity to make one tonne of AA100, two hours to refine AA100 further into AA101, and four hours to refine AA100 into AA102 instead. The plant accountant has prepared the following cost sheet for the three products: Kequirea - (a) Determine the production levels for the three products under the present constraint on plant capacity that will maximize operating income. (b) Suppose a customer is very interested in the new product AAl0l. It has offered to sign a long-term contract for 400 tonnes of AA101. It is also willing to pay a higher price if the entire plant capacity is dedicated to the production of AA101. What is the minimum price for AA101 at which it becomes worthwhile for Fisher to dedicate its entire capacity to the production of AA101? (c) Suppose, instead, that the capacity can be increased temporarily by 600 hours if the plant is operated overtime. Overtime premium payments to workers and supervisors will increase direct labor and variable manufacturing support costs by 50% for all products. All other costs will remain unchanged. Is it worthwhile operating the plant overtime? If the plant is operated overtime for 600 hours, what are the optimal production levels for the three products? Show details to your calculations