Koepel Craft Beer (KBC) is a small craft beer brewer in Potchefstroom. Their beer are considered top class and locals are loving it. The plant has a maximum production capacity of 80 000 machine hours per annum.

KBC are currently producing three types of beer, namely Ale, Lager and Weiss. The beer is brewed in stainless steel containers and at the right time bottled in a 500m1 glass bottle.

The following information for the three products was compiled by the costing department and applies to the 2016 year:

Ale Lager Weiss

Sales mix in rand 50% 30% 20%

Sales price per bottle $25 $30 $40

Raw material per bottle $14 $15 $18

Direct labour hours required per bottle 0.5 1.5 1.5

Machine hours required per bottle 2 4 6

KBC is renting the plant from the founders 'trust at a fixed amount of $100000 per annum. The plant is fully automated and only requires one supervisor making sure everything runs smoothly and can stop the plant in case of an emergency. The supervisor is paid $60 000 annually. The only time when laborers are required is when the stainless steel containers need be turned as part of the brewing process. The supervisor then hires the laborers at a rate of $5 per hour.

KBC's electricity expense is directly related to the amount of hours that brewing equipment is operated. Electricity costs were as follows at the given activity levels:

Machine hours 50 000 60 000 75 000

Electricity costs $75 000 $80 000 $87 500

It can be assumed that fixed costs remain constant for the entire relevant range of production.

The maximum demand for the company's products per year is 18 000 bottles Ale, 10 000 bottles Lager and 6 000 bottles Weiss.

The company's tax rate is 28% per annum.

REQUIRED:

1.1 Calculate the break-even point in bottles for each type of beer if the current sales mix is maintained.

1.2 Assuming the plant is operating at full capacity, determine the sales mix in bottles that will maximize the profit.

1.3 KBC wants to appoint an agent that earns a commission of $1.50 per bottle for each unit sold in excess of the break-even point, as well as a fixed salary of $84 000 per annum. Assume the KBC wants an after-taxation profit of $108 000, calculate how many bottles of beer needs to be sold in total? Assume the original sales mix is applied.