The Southland Carpet plant produces three different grades of carpet. Excessive demand for carpets has resulted in a backlog of orders, which means customers will buy all of the carpet produced by the plant next week irrespective of the grade actually manufactured. Direct labour costs $4.00 per hour and there only 800 direct labour hours available each week. The costs and sales revenue associated with each grade of carpet are as follows:

	Grade 1		Grade 2		Grade 3
Selling price per metre	$40		$32		$25
Variable costs per metre:
Direct materials	$8		$14		$15
Direct labour	$16		$8		$4
Overhead ( of direct labour)	$4		$2		$1

Required

Which grade of carpet should the plant manufacture next week?

(Note: You should support your answer to this question with calculations.)