The Rosana Textiles Company manufactures and sells three types of outer-wear, a Basic, a Standard and a Superior waxed jacket. The forecasts for the forthcoming year are as follows: Basic Standard Superior Rs Rs Rs Selling price 560 1200 2250 Direct materials 200 400 1000 Direct Wages 100 150 200 Variable overheads 160 300 400 Fixed overheads (apportioned) 80 120 160 Sales (units) 5000 3000 1500 The material price per metre varies according to each coat but the usage (4 metres per coat) is the same. Employees are paid at a rate of Rs25 per labour hour. The fixed overheads for the period are Rs200,000, absorbed on a direct labour hour basis. At the same time as the forecasts were completed a competitor in the same industry increased the wage rates to its employees and some Rosana Textiles employees secured jobs at the other company. This resulted in the workforce falling by approximately 30 per cent. The total labour hours now stands at 40,000 hours. Required: (a) Given the reduction in labour hours, which product(s) should the company concentrate on? Calculate the net profit resulting from your suggestion. (b) A comparable product could be imported. The buying-in prices for the three products are Rs462, Rs870 and Rs1575 for the basic, Standard and Superior respectively. What would be your advice, stating some non-financial considerations?