management accounting

1 . Bella Corporation is a small company making two products with the following financial details: Bella simple Bella deluxe E E Selling price 16 24 Variable costs 6 16 The weekly fixed costs are $3,000 The use of resources by each product is: Bella simple Bella deluxe Material 45 0.4 kg 1.1kg Material 96 2 kg 1.5kg Machine time 4 minutes 3 minutes Labour time 15 minutes 25 minutes The materials are difficult to obtain and are made by only one supplier. There will be a delay in delivery of the ingredients for the next week so Bella Corporation will use the ingredients in inventory of: Material No.45 - 500 kg, Material No.96 - 1,000 kg The weekly machine capacity is 40 hours. The weekly labour time is 200 hours. Five employees are paid for a 40 hour week even if there is not enough work to fill 40 hours. The corporation can sell all of its production. Required: a) Using a graphical approach calculate the most profitable production quantities for the week, given the constrained resources and calculate the net income which will be made. (12 marks) b) In this particular week the only resource which could be increased is labour. The company could obtain more labour time by paying overtime of $10 per hour. Calculate how many hours should be paid for and calculate whether this action would improve net income, considering the other constraints which exist. (8 marks)