Hemas is a manufacturing company producing different types of soaps. Baby soaps, beauty soaps which are used by men and woman and medicated soaps which are used by people have skin disorders. All the three types of soaps are manufactured using same resources. Following information is available about the price and resources used for manufacturing all the three products.

Particulars	Baby soap (BS)	Beauty soap (PS)	Medicated soap (MS)
	OMR	OMR	OMR
Selling Price per pair	1 to 2	1.5 to 2.5	2.5 to 3.5
Material cost (RO 0.25 per soap)	0.50 (2 units)	0.75 (3 units)	1(4 units)
Direct Labour (OMR 0.025 per hour)	0.050(2Hours)	0.10(4 hours)	0.150(6 hours)
Machine Hours (OMR 0.35 per hour)	0.140(4 MH)	0.35(1MH)	0.70 ( 2MH)
Expected Demand for June (no of soaps)	5,000	8,000	2,500

Company has got a special-order of 1000 soaps for each product from LuLu hypermarket who are their regular customers but at a discount price of OMR 0.250 for each product. This special order is not included in the above demand.

Hemas generally has sufficient resources to meet the demand but because of the limited supply from their regular supplier, the company has following resources available for the month of June.

Direct Material 53,250 units

Direct labour 54,000 Hours

Machine Hours 45,000 Hours

Question 2

Required:

1. What do you understand by limiting factor, evaluate the concept of outsourcing when resources are limited? 3 Marks
2. Calculate the optimum production Plan for Hemas company for the month of June, assuming that the special order of the regular customer will be supplied in full. 8 Marks
3. What is the total contribution for the month of June? 4 Marks