Happy Ltd, a small firm, manufactures and sells gift boxes in three different types; Square Box (SB), Circle Box (CB), and Triangle Box (TB). All of the gift boxes are manufactured using the same types of material and labour but in different quantities. The following details relate to three types of boxes manufactured by Happy Ltd: SB 10,000 CB 8,000 TB 5,000 Annual Demand (units) /Unit 13 2 /Unit 16 2.5 /Unit 19 3 Selling Price Direct Material (10 per square metre) Direct Labour (20 per hour) Variable Overheads Fixed Overheads Profit/(Loss) 3 1.5 5 1.5 4.5 2.25 5 1.75 7.5 3.75 5 (0.25) Happy Ltd's policy is to have zero inventories. Material, labour cost, and variable overheads vary directly with volume of production. Total fixed overheads is 115,000 per annum and it is allocated to the products based on units produced and sold but it is independent of them. Required: (a)The director of Happy Ltd is concerned of the loss reported for TB and has asked for your advice if it is better to stop producing TB. Advise the director whether TB production should be stopped? (b) In the process of planning for next year, the director informs you that the firm has a maximum of 5,000 square metres of material and 6,000 labour hours available next year. Advise the director which one of material and labour will be the scarce resource. Considering that, how many units of each gift box should Happy Ltd manufacture and sell in order to maximise profits or minimise losses? Calculate this profit or loss (assume part units can be manufactured)