Question Two: (24 marks) Open Lakes Company manufactures water sport products. Due to an increasing focus on tness, the company has been experiencing an increased demand for its products. Two of its newer products, which are very popular with water sport enthusiasts, require a waterproong process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 12,000 machine hours, and no other products that the company makes use these machines. Sam, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Diana, the company's controller, has gathered the following information about the two products: Model M Model K Selling price per unit $200 $244 Direct materials 80 60 Direct labor 16 32 Variable overhead 12 24 Fixed overhead A Prot per unit g g Unit sales demand 8,000 14,000 Machine hours per unit 0.4 0.8 Required: (6 marks each} a. Calculate the total number of machine hours needed to produce enough units to meet the sales demand for the two products. b. How should Sam allocate the 12,000 available machine hours between the two products so that Open Lakes maximizes its prots? c. What total contribution margin will Open Lakes realize based on your answer to (b)? (1. Sam has talked with the marketing department about the situation and suggested that the company raise the sales price on the Model K to $3 20 to reduce customer demand. The marketing department believes that at the higher price, demand for this Model K will drop to 11,600 units. How should Sam allocate the 12,000 machine hours based on this new information? What total contribution margin will Open Lakes earn