You have been engaged with PQR Ltd, a manufacturing company to provide advice on the most profitable production plan for the company.

The company makes three products Alpha, Beta and Gamma and the appropriate data are as follows for the year 2020

Cost per unit and selling price

	Alpha	Beta	Gamma
	RM	RM	RM
Selling Price	45.00	50.00	38.00
Direct Material Cost	12.5	15	7.5
Direct Labour Cost (RM4 per direct labour hour)	8	6	8

:

Additional Information

1. Variable overheads are absorbed at RM6 per direct labour hour
2. Fixed overheads total RM24,900.
3. Budgeted volume per annum

Products	Units
Alpha	1,200 units
Beta	1,800 units
Gamma	1,500 units

There is a constraint on the direct labour hours, which is limited to 6,500 direct labour hours.

The sales director has already accepted an order for 100 ALPHA, 200 BETA and 400 GAMMA which must be supplied. These quantities are included in the market demand estimates above.

Show all relevant workings.

a) Identify any shortfall for the year 2020 based on the above information.

b) Determine the production units of each product in order to maximize profit.

c) Calculate the maximum profit based on your answer obtained in (b) above