Question 9: (13 marks) Cam Chemical Canada Inc. produces three products at its plant in Fort Saskatchewan-A, B, and C. Their selling prices and costs per barrel from last year are as follows: Product A $ 125 Product B $ 135 Selling price Product C $ 110 Variable costs Direct material Direct labour (@ $20 per DLH) Variable overhead (@ $25 per MH) Variable selling Total variable costs 23 25 5 5 $58 22 21 25 6 $74 17 19 15 3 $54 Fixed overhead* $20 $22 $20 Gross margin $47 $39 $36 * Fixed overhead is allocated to products. The company uses departmental rates to apply fixed overhead based on the plant's capacity of 90,000 direct labour hours (DLHS) and 125,000 machine hours (MHS) per year. The plant's cost structure and capacity next year will be the same as this past year. The marketing department forecasts that the plant could sell a maximum of 50,000 barrels of each product next year. Required (parts a & b): a) Calculate the total machine hours (MHs) and direct labour hours (DLHs) required to meet the marketing department's sales targets. Does the company have a production constraint, and if so, with MHs or DLHs? (4 marks) b) Ignore part a). Instead, assume that the company has a production constraint on direct labour hours (note: this may or may not be the correct answer to part a). In what order should the products be produced? That is, rank the products from the most profitable one to the least profitable one under the production constraint. And, how many barrels of each product should the plant produce? Show all necessary calculations to support your answer. (9 marks)