Summer dress production line Fashion Forward (Pty) Ltds summer dress production line consists of two divisions, namely the Cutting Division and Sewing Division.

The Cutting Division is responsible for cutting the panels for the summer dresses from the required fabric and has the capacity to cut 12 000 panels per month.

From the Cutting Division, the panels are transferred to the Sewing Division. The Sewing Division is responsible for sewing together two panels per summer dress to have one completed dress. The Sewing division has the capacity to manufacture 5 000 completed summer dresses per month.

The finished summer dresses are sold for R600 each and the following variable costs apply: Cutting Division Variable manufacturing cost per panel R90 Variable selling costs per panel* R50 Sewing Division Variable manufacturing cost per dress R190 Variable selling cost per dress R150 *No selling costs per panel are incurred if the panel is transferred to the Sewing Division.

There is, however, also an external market demand for the panels only. The consumers in the market are willing to purchase a panel for R205. It is estimated that 3 000 panels can be sold each month to external consumers in the market.

With reference to the Summer dress production line, advise Fashion Forward (Pty) Ltd on how many panels should be transferred from the Cutting Division to the Sewing Division per month and how many panels should be sold externally to maximise Fashion Forward (Pty) Ltds profit. (10 marks)