Question 1 TP Ltd. produces a product which passes through two processes- cutting and finishing. The following information is provided : Cutting Finishing Hours available per annum 50,000 60,000 Hours needed per unit of product 5 12 Fixed operating costs per annum excluding direct material (5) 10,00,000 10,00,000 The selling price of the product is $1,000 per unit and the only variable cost per unit is direct material, which costs $ 400 per unit. There is demand for all units produced. Evaluate each of the following proposals independent of each other : (1) An outside agency is willing to do the finishing operation of any number of units between 5,000 and 7,000 at $ 400 per unit. (ii) An outside agency is willing to do the cutting operation of 2,000 units at $200 per unit. (iii) Additional equipment for cutting can be bought for $10,00,000 to increase the cutting facility by 50,000 hours, with annual fixed costs increased by $ 2 lakhs