Pens Ltd manufactures two types of writing pen - The Simple and the Sleek (the Sleek being a higher quality item). Both products use similar parts but in different quantities. They also differ in the amount of work needed in the production, selling and billing process. They are both made in batches (large batches for Simple and small ones for Sleeks). Each new batch requires that the production facilities are"set-up".

Simple Sleek Annual production and sales (units) 7,500 10,000 Sales price per unit 650 695 Batch size (units) 1,000 200 Direct labour time per unit (hours) 2 4 Direct labour rate per hour E9 E9 Direct material cost per unit E15 E20 Number of special parts per unit 2 4 Number of setups per batch 1 2 Number of separate material issues from stores per batch Number of sales invoices issued per year 50 250