Full explanation with formulas included

Malta Ltd makes three types of boots for the Fire Services Division: A, B and C. Demand and costs per unit in the coming period are estimated to be as follows: Boots A B Demand (units) 1,000 3,000 4,000 Unit variable costs Rs per unit Rs per unit Rs per unit Direct labour (Rs80 per hour) 400 600 800 Direct material 200 500 200 Variable overhead 200 300 400 Total variable cost per unit Absorbed fixed overhead 800 300 1400 450 1400 600 Total production cost 1100 1850 2000 Selling Price 1600 2000 2500 Fixed overheads are absorbed on the basis of direct labour hours and represent apportioned general factory overhead. The direct labour used to produce the boots is highly skilled and Malta Ltd sometimes has difficulties in recruitment, resulting in shortages of labour. Due to rapid technological change, stocks of completed boots are never carried The finance director of Malta Ltd considers the costs of the boots to be too high and is considering subcontracting their manufacture. A supplier has offered to supply any quantity of A, B, or C for Rs1000, Rs1600 and Rs1700 per unit respectively. (b) Based on the information given, calculate the optimal product mix which will maximize Malta Ltd's profitability, given that labour hours for the period are restricted to 49,500 hours. Calculate the amount of the profit. (12 marks)