PART A (CLO 3

You are the Sales Manager for your company and you are evaluating orders from two customers but can accept only one of the orders because of your companys limited capacity.

The first order is for 100 units of a product with a contribution margin ratio of 60% and a selling price of $1,000.

The second order is for 500 units of a product with a contribution margin ratio of 20% and a selling price of $800. The incremental fixed costs are the same for both orders. Which order do you accept? (show workings)

PART B (CLO 4)

Matt Ltd is currently preparing the production budget for steering wheel covers and the material purchases budget for plastic for the upcoming year. Each unit of steering wheel cover requires 5kg of plastic material.

- The anticipated opening stock of steering wheel cover is 5,000 units

- Matt Ltd wishes to increase the closing stock of steering wheel covers by 30% by the end of the year

- The anticipated opening stock for plastic material is 50,000 kg and in order to avoid stock-outs the required closing stock has been increased to 60,000 kg.

- The Sales manager confirmed expected sales of 70,000 units of steering wheel covers.

Required:

How many units of steering wheel cover will need to be produced? (show workings)