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Hawk Ltd has three types of shoes all of which require the same production facilities. Financial data on the three products are as follows: Product X Y Z Selling price per unit () 90 110 160 Variable Material Cost per unit () 26 15 28 Variable Labour Cost per unit () 14 35 42 The share of Fixed overhead per unit () 16 16 16 Labour time per unit (hours) 2 hrs 5 hrs 6 hrs Monthly demand in units (units) 400 units 300 units 200 units The same labour is used to produce all three products and hence, fixed cost is not affected. The business has labour hour capacity of 2,500 hours per month. Total fixed cost per month is 28,000. Required: A) With supported workings, show which combination of products to be produced to achieve the highest profit for the company. Clearly show your workings which show the no of units to be produced, total contribution and total profit/(loss). (Total: 20 marks) B) If the business were to produce only product X for the next month: - How many units of product X should be produced to break- even? (Note: Assume for this part of the question that there is no effective limit to market size and staffing level) (3 marks) - What is is the contribution margin ratio % for product X? (3 marks) - How many units of product X should be sold by Hawk Ltd in order to achieve a target profit of 15,500 per month. (4 marks).

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