Section B Question 5 Techsupport NI Limited is a computer support company which provides online and personal computer technical support to a wide range of businesses and individuals. The support packages range from a simple online support to site visits. All staff are capable of providing support on any of the four support packages offered by the company. The forecast costs for the coming year and the expected demand for each of the support packages are estimated below: Simple Standard Deluxe Elite Support Support Support Support Package Package Package Package 840910710 650 280 350 450 SA506550 Number of support packages to be sold Annual price of package Expected inputs / costs: Computer time per package Technical support staff time per package Other variable overheads per package 2 hours 4 hours 40 3 hours 4.5 hours 50 4 hours 6.5 hours 65 6 hours 8 hours 80 Fixed costs are expected to be 425,000 for the year. The cost of computer time per hour is 26 and the technical support staff are paid 14 per hour. Requirement (a) Calculate the weighted average contribution for each type of technical support package. 6 Marks (b) The company currently employs ten full-time members of staff who provide 35 hours of technical support per week and are expected to work 48 weeks in the year. What is the optimum mix of technical support packages that the company should provide and what profit will the company make based on the information provided? 8 Marks (c) Briefly discuss the usefulness of contribution and break even analysis for decision making. 3 Marks (d) Techsupport NI Limited has recently been approached, by a regional health care trust, to provide computer and technical support to a group of hospitals and general practitioners. The number of support packages is expected to be 1,500 at a price of 339 which will require 3 computer hours, 6 technical staff hours and incur additional fixed costs of 46,000. Given the specialist nature of the potential client, 6 new full time staff will be recruited and the staff cost will be 16 per hour. Other variable overheads will be 60 per package sold. Advise the management of Techsupport NI Limited if they should proceed with this potential offer and calculate the new total profit that the company might achieve. 8 Marks Total 25 Marks