Question I (25 Marks) Part A: (8 marks = 9.6 minutes) A Ltd. is a factory located in a remote village. Recently, due to limited electricity supply, its production and sales volume has dropped from the normal level of 30,000 units to 8,000 units per month. A Ltd. was told that the electricity shortage will continue for the next 3 months; therefore, it is contemplating to close down the factory for the next 3 months. If it does close down the factory, its fixed manufacturing overhead costs will be reduced by $45,000 per month and its fixed selling costs will decrease by 10%. However, the factory restart after the 3-month closure will incur $8,000 in total. The current selling price of its product is $22 per unit, variable costs are $14 per unit, fixed manufacturing overhead costs are $150,000 per month, and fixed selling costs are $30,000 per month. Required: (Round to 2 decimal places, Show workings) (1) Should A Ltd. close down its factory for 3 months? Why? Support your answer with calculations. (5 marks) (2) Compute sales volume (in unit) for the 3-month period at which A Ltd. would be indifferent between closing down the factory or continue producing under limited electricity supply. (3 marks) Part B: (17 marks = 20.4 minutes) B Ltd. manufactures 4 products using a robotic machine. The maximum number of robotic machine hours available is 2,000. The following table summarizes the relevant data of each product: Product W Y Z Selling price/unit $28 $30 $45 $42 Direct material/unit $5 $5 $8 $6 Direct labor/unit $4 $4 $8 $8 Variable overhead / unit $3 $3 $6 $6 Fixed overhead / unit (total $8,000) $8 $8 $16 $16 Robotic Machine hours needed/unit 4 3 4 5 Demand (in units) 200 180 250 100 Required: (Round to 2 decimal places, Show workings) (1) Determine a production plan which will maximize the profit for B Ltd. (4 marks) (2) Assume that a machine rental company offers to lease a robotic machine with a capacity of 500 robotic machine hours. Compute the maximum rental fees B Ltd. would be willing to pay. What factors should B Ltd. consider in its rental decision. (7 marks) (3) Assume that an overseas supplier offers to sell 180 units of X to B Ltd. for $19 per unit, including shipping costs. Due to the limitation of robotic machine hours, B Ltd. is thinking about buying product X from an overseas supplier and then repackaging it at a cost of $1 per unit and selling it to its local customers at its regular selling price. Should B Ltd. accept or reject the offer in order to maximize its profit. Support your answer with quantitative and qualitative reasons. (6 marks)