Personalised Pens makes pens in three different categories under the headings of basic, quality and luxury.

Once made, the pens are engraved with a name or phrase as specified by the customer. Analysis shows that for the last three years pens have sold in the ratio 25: 10; 3 (basic, quality, luxury respectively).

The table below contains information relating to the pens;

	Basic	Quality	Luxury
Average selling price per unit	5	9	16
Direct Material; metal	0.50	2.05	6.60
Direct Material; plastic	0.75	0.60	0.20
Direct Material; ink	0.20	0.45	1.05
Direct Material; packaging	0.05	0.25	1.00
Printing	0.20	0.20	0.20
Machining	0.50	1.00	1.50

Fixed overheads for the business are usually 4,000 per month. Machining costs 2 per hour.

Required:

a) Calculate the contribution for each type of pen.

b) Calculate the breakeven quantity for each type of pen.

c) Outline two limitations of the break-even method used above.

d) Personalised Pens is a small business with limited machine capacity. Calculate the contribution per limiting factor for each type of pen and state which types of pens should take priority when scheduling production.

e) Suggest some non-financial factors that should be considered when a management team make decisions based on the methods used above.