SECTION B : Answer any 2 questions in this section: Question 2 Luxor Ltd manufactures two products. The following budgeted information relates to each product: Selling Price Per Unit Direct Materials Cost Per Unit Direct Labour Hours Per Unit Direct Labour Wage Rate Per Hour Variable Overheads Per Unit Normal production and sales per month (units) TOTAL fixed overheads PER MONTH Product A 100 54 0.5 hours 12 20 5,000 50,000 Product B 120 48 1 hour 16 26 4,000 48,000 Required: (a) Calculate the following for each Product, based on the information given above: i. ii. iii. iv. Contribution per unit Break even point in terms of units and sales revenue Margin of Safety in units Budgeted Profit per month (10 marks) (b) Explain each of the underlined terms in part (a) above. (4 marks) (c) The production manager is concerned that there will be a shortfall of labour hours during the next month due to staff holidays. He estimates that there will be 4,000 hours available. You have been asked to: i. ii. Calculate the number of labour hours required by Luxor Ltd in the month and the anticipated shortfall; Determine which product should have production priority; Calculate the number of units that should be produced in order to maximise profit/minimise loss and the level of estimated profit/loss figure for the next month. (13 marks) (d) Suggest what action the company could take to ensure that there were sufficient labour hours available to meet demand. (8 marks) Total 35 marks