Question 4

Modern Home Sdn. Bhd. manufactures four types of multi-purpose storage cabinets: Modern, Antique, Trendy and Smart. The selling price and the marginal cost of each product are as follows

	Modern	Antique	Trendy	Smart
RM	RM	RM	RM
Selling Price	220	340	440	280
Marginal cost	84	104	144	124

The companys fixed costs are RM150,000 per annum. There is a shortage of a raw material called Glossy Melamine which is used in all four products. Modern uses 20 ml of Glossy Melamine, Antique 20 ml, Trendy 28 ml and Smart 30 ml. Only 300,000 ml of Glossy Melamine will be available for the year. In addition, market constraints are expected to restrict the production and sales of each product to:

Modern: 5,000 units, Antique: 4,000 units, Trendy: 3,000 units and Smart: 3,000 units.

	Identify which product (s) the company should concentrate on. Show all workings.
	(12 marks)
	Calculate the numbers of each type of cabinets to be produced and sold to maximize profit of Modern Home Sdn Bhd.
	(10 marks)
( c )	Prepare a marginal cost statement showing the profit of Modern Home Sdn Bhd for the year.
	(8 marks)