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Question 1 Bow Paul Pte Ltd (BP) makes and sells three types of hand-held vacuum cleaners for the local market. The standard cost and revenue
Question 1 Bow Paul Pte Ltd (\"BP") makes and sells three types of hand-held vacuum cleaners for the local market. The standard cost and revenue data are provided below. Standard cost and selling price per unit Basic (%) Plus (%) Super ($) Materials Manufacturing labour Fixed overheads Selling price Manufacturing labour includes both manufacturing and installation labour, who are employed hourly based on production requirements. Workers are paid $8 per hour. Fixed overhead costs for the period are expected to be $400,000 for a total capacity of 80,000 machine hours. Fixed overheads are allocated to products based on machine hours. The market demand for vacuum cleaners for the year is 55,000 units for Basic, 11,000 units for Plus and 2,200 for Super. Question la Develop, with clear supporting computations, a production schedule that will maximise BP's profit. Based on your recommended production schedule, calculate BP's expected profit. Question 1b BP's preduction manager has found an additional machine that can add 3,600 machine hours annually to increase capacity to 83,600 machine hours. The additional annual cost of adding the machine is $200,000. Unit variable costs are not expected to change. Show computations to justify if BP should utilise the additional machine. Give one qualitative considerations BP should consider when deciding on this purchase
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