QUESTION ONE Part A Vita-Immune Lid. is considering expanding its product range by producing two new multi- vitamins and multi-minerals with Immunity booster ingredients in two different forms. Gummies and Oral spray. Both products will be produced from the same resources but with different combinations. These resources will be available to produce the new products only. Details of estimated selling prices and cost per unit of each product are given below. Gummies Oral Spray Selling Price per unit E229 E260 Cost per unit: Material A (EB per kg) 40 16 Material B (E20 per kg) 20 60 Labour (E25 per hour) 75 100 Variable overhead ((16 per machine hour) 32 48 Total fixed costs are estimated to be E70,000 per month. The management of Vila- Immune Lid. Is in the process of using a linear programming model to determine the optimal monthly production plan for the new products. The management accountant has indicated that the following resources are available each month as follows: Total monthly availability Material A 10.150 kg Material B 6,500 kg Labour 8,400 hours Required: 1. Formulate the objective function and constraints functions. (5 marks) 2. Using the graphical approach of linear programming, identify the feasible solution region and the optimum solution point in terms of the output of each product and total contribution produced. (10 marks) 3. In your own words, explain the concept of shadow pricing then Identify the binding constraints and their related shadow prices. (10 marks) 4. What is the effect of having a maximum demand on the Oral spray of 2000 units per month?' Explain your answer (5 marks) MAN- 30045 Final Exam 2021-2022 Papa 2 of 9 [Question One continued] Part B Safety first Lid manufactures and sells two products reusable face masks and face shields. Details of selling prices and variable cost per box of face masks and unit of face shield are as follows: Face Masks Face shields Selling price EB Variable costs $2.80 Current Sales Mix Safety first Lid budgeted fixed cost for the year is 6407,000, and budgeted sales revenue for the coming year is expected to be $1,250,000 for the standard mix. Required: 1. Calculate the break even units and sales value (E) in terms of mix and each product. (6 marks) 2. Calculate the margin of safety sales value (E) and percentage. (4 marks) 3. After the latest Government announcement that wearing a face mask is not mandatory anymore. The management of Safety first Lid is considering changing the sales mix ratio to 2: 2 and focusing on producing more face shields. Re- calculate required (1) and (2) above. Advice the manager of Safety first Lid on whether to adopt this plan or not? Justify your answer. (10 marks)