The Leasten Company has one machine on which it can produce either ofthe two products. Uno and Duo. Sales demand for both products is such that the machine could operate at full capacity on either one ofthe products and Leasten can sell all ofthe output at current prices. The requirement of machine time and cost and price data for both products are given below: Per unit of production m M Selling price $60 5110 Direct mate rials cost $8 $9 Direct labor cost $3 55 Cost of Machine Depreciationa $15 $30 Allocated factory xed costs excluding depreciationb $9 $15 Total production cost $35 $59 Gross margin per unit 525 $51 Variable selling and administration cost $1 $2 Net prot before fixed 56% cost $24 $49 aMachine depreciation cost is allocated based on machine hours @ a rate of $5.00 per hour bEither xed factory costs are allocated based on DL costs @ a rate of $3.00 per dollar 0f DL COSt Hiram a) Fixed selling and administration costs are the same for both Uno and Duo. Which product should Leasten manufacture and why? b) Assume that the demand for Uno and Duo and the production capacity ofthe machine are as given below for the rest of the problem m M Demand in units per month 1.000 2,000 Available machine capacity per month 11.400 hours Find out how many units of Uno and Duo should be manufactured per month. c) Based on your answer for part (b), what is the opportunity cost of not having enough machine capacity per month? d) Suppose the company has a policy of meeting ALL ofthe market demand irrespective of constratints. Company can outsource the production to an outside vendor and get either Uno or Duo supplied at short notice. The following purchase prices for Uno and Duo are applicable for outsourcing. Uno Duo Purchase price from outside vendor $50 $100 HovuI many units of Uno and Duo should be manufactured in house per month? How many units of Uno and Duo should be outsourced per month? E) Based on your answer for part (cl), what is the opportunity cost of not having enough machine capacity to produce all the units demanded by the market