Yarnton Electronic Products Ltd (YEP) makes three products for the consumer market. The production and sales information for these products is shown in Table 4.1. Lilley Products Ltd. makes three electronic products for the consumer market. Table 4.1 Product details Product Materials () Sales volume Selling price () Labour hours 3.3 2.7 2.6 A B 7.50 4.50 14.50 7500 14000 9500 52.50 49.00 53.50 The company overheads are listed in Table 4.2. These overheads are required irrespective of what is made or not made. Table 4.2 Company Overheads Overhead Annual cost () Stores 35,000.00 Production Management 55,000.00 Research & Development 55,000.00 Finance 30,000.00 Sales and Marketing 55,000.00 Management 25,000.00 The working week is 37 hours. There are 46 working weeks to the year however all production workers are on full time contracts and are hence paid for 52 weeks of the year. Each employee is paid 10.50/hour. Problems: (a) [2 Marks each = 6 Marks] What is the Gross Margin for each of the three products? (b) [2 marks] How many production workers are needed? (c) (d) (e) [4 Marks] What is the annual profit the company is currently making [2 marks] If all the overheads are to be recovered against labour hours what is the hourly overhead rate? [6 Marks] Using this information what is the fully absorbed cost and profit per product of each product? [3 Marks] How much additional profit would the company make if it were to make one more of each product? (f) (g) [2 marks] Which product should it make more of