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Padhaka's - Students' Handbook on Strategic Cost Manag 10.2 Key Factor - Product Mix Decision - Minimum Production Condition - Additional Cost Paya Wonderful Woodworks Ltd manufactures three play articles of wood-Chairs, Benches and Tables. The budgeted unit costs and resource requirements of each of these items is given below. Bench Chair Article 15.00 5.00 Timber Cost Direct Labour Cost 4.00 10.00 Variable Overhead Cost 3.00 7.50 Fixed Overhead Cost 4.50 11.25 Total Costs 16.50 43.75 Budgeted Volume per annum 4,000 units 2,000 units Selling Price 1,500 units 20.00 Table 10.00 8.00 6.00 9.00 33.00 50.00 40.00 The Fixed Overheads are attributed to the three products on the basis of Direct Labour Hours. The Labour Rate is * 4 per hour and the Cost of Timber is 2 per sq.m. The articles are made from a special grade of timber, the supply of which is restricted to 20,000 sq.m p.a. The Sales Director has already accepted an order for 500 Chairs, 100 Benches and 150 Tables, from a Departmental Store, which if not supplied would incur a financial penalty of * 2,000. These quantities are included in the market demand estimates shown as budgeted volume per annum. 1. Determine the Optimum Production Plan and the Net Profit earned under that plan. 2. Calculate and explain the maximum prices that may be paid per sq.m in order to obtain extra supplies of Special Timber