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QUESTION 3 (25 MARKS) Good Manufacturing Sdn Bhd manufactures three types of tote bag namely Rose, Tulip and Orchid. The demand for the tote bags
QUESTION 3 (25 MARKS) Good Manufacturing Sdn Bhd manufactures three types of tote bag namely Rose, Tulip and Orchid. The demand for the tote bags is increasing but the company has limited direct labour hours to meet the demand. The following data were provided for the next coming year: Selling price per unit Direct materials per unit Direct labour hour per unit Demand next year Rose RM19.00 RM5.40 0.5 hour 92,000 units Tulip RM21.00 RM6.50 0.6 hour 85,000 units Orchid RM18.00 RM5.20 0.4 hour 150,000 units Additional information: 1. The company's plant has a capacity of 145,000 direct labour hours per year. 2. The direct labour rate is RM9 per hour and this rate is expected to remain the same during the coming year. 3. Variable manufacturing overhead costs are absorbed at RM2 per direct labour hour and total fixed manufacturing overhead costs are RM500,000 per year. 4. Variable selling expenses are calculated at 10% on sales price and fixed administartive expenses estimated at RM130,000 per annum. Required: a. Determine the contribution margin per direct labour hour for each unit of the products for the coming year. (12 marks) b. Prepare a schedule showing the total direct labour hours that will be required to meet the demand of the three products for the coming year. (5 marks) c. Based on your calculation in (a) and (b) above, prepare a budgeted profit statement of the company. (5 marks) d. If the scenario is expected to persist for an extended period of time, recommend the solutions that the company should pursue to resolve the
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