Question 2 A company manufactures three products: X, Y and Z. The management has predicted the demand for these products for next month as follows: Product X 500 units Product Y 600 units Product Z 300 units The products use a series of different machines but there is a common machine, Machine A. Due to essential maintenance that needs to be carried out, the amount of available machine hours of Machine A is likely to be 200 for next month. The selling price and the standard cost per unit for each product are as follows: Z Y () 20 22 35 Selling price per unit Cost per unit: Direct material 4 Direct labour 1000 W 5 Overheads 6 0 1000 4 7 Profit per unit Machine A usage (minutes per unit) 6 10 50 per cent of the overhead cost is classified as variable. Required: Prepare a memo for the top management of the company, with explanations: 2.1 Indicating why machine hours of Machine A is a limiting factor; (5%) 2.2 Showing the ranking of the product for best use of the available machine hours of Machine A; (15%) 2.3 The optimal production plan. (5%) (TOTAL 25%)