Guitar Mania Ltd. makes two types of wood guitars in a single facility. Data concerning these guitars is included in the following tables:

	Products
	A	B
Selling price per unit	$ 800	$ 700
Total variable costs per unit	$ 480	$ 410
Contribution margin	$ 320	$ 290
CM Ratio	40%	30%
Kilograms of wood per unit	5	3
Demand in units	500	1,000

Demand for the companys guitars is very strong, with far more orders on hand each month than the company has raw materials available. The same material (wood) is used in both types of guitars and costs $30.00 per kilogram with a maximum of 5,000 kilograms available each month.

Required:

a) How may kilograms of material would be required to satisfy demand? (2 marks)

b) Which orders would you advise the company to accept first? Show work to support your decision. (2 marks)

c) How much would the company be willing to pay for one additional kilogram of material in excess of the normal price if the company has already made the best use of the existing 5,000 kilograms. (2 marks)