Orbital Industries Ltd manufactures a variety of materials and equipment for the aerospace industry. A team of R & D engineers in the firm's Technology Park plant has developed a new material that will be useful for a variety of purposes in orbiting satellites and spacecraft. Trade-named Ceralam, the material combines some of the best properties of both ceramics and laminated plastics. Ceralam is already being used for a variety of housings in satellites produced in three different countries. Ceralam sheets are produced in an operation called rolling, in which the various materials are rolled together to form a multilayer laminate. Orbital sells many of these Ceralam sheets just after the rolling operation to aerospace firms worldwide. However, Orbital also processes many of the Ceralam sheets further in the Technology Park plant. After rolling, the sheets are sent to the moulding operation, where they are formed into various shapes used to house a variety of instruments. After moulding, the sheets are sent to the punching operation, where holes are punched in the mouldedsheets to accommodate protruding instruments, electrical conduits and so forth. Some of the moulded and punched sheets are then sold. The remaining units are sent to the dipping operation, in which the moulded sheets are dipped in a special chemical mixture to give them a reflective surface.

During November, the following products were manufactured at the Technology Park plant (the direct material costs are also shown):

Units Direct Direct material material used in used in Ceralam dipping products Ceralam sheets (sold after 12000 $480 000 the rolling operation) Non-reflective Ceralam 5000 200 000 wwwwwwwwwwwwwwwwwww housings (sold after the punching operation) Reflective Ceralam 3000 120 000 $30 000 housings (sold after the dipping operation) Total 20 000 $800 000 $30 000Rolling Moulding Punching Dipping Direct $800 000 0 $30 000 material Direct labour 300 000 $1 12 000 $128000 45 000 Manufacturing 450 000 168 000 192 000 67 500 overhead Total $1 550 000 $280 000 $320 000 $142 500