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Problem 10.53 (Purchase from outside or sub-contracting-Most profitable combination). A processing company, EF, is extremely busy. It has increased its output and sales from 12,900 kg. in quarter to 17, 300 kg. in quarter 2 but, though demand is still rising, it cannot increase its output more than another 5% from its existing labour force which is now at its maximum. Data in quarter 2 for its four products were Product e R S Output (kg) 4,560 6,960 3,480 2,300 Rs. per kg. Selling price 16.20 11.64 9.92 13.68 Costs: Direct labour (at Rs. 6 per hour) 1.96 1.30 0.99 1.70 Direct material 6.52 4.90 4.10 5.42 Direct packaging 0.84 0.74 0.56 0.70 Fixed overhead (absorbed on basis of direct labour cost) 3.92 2.60 1.98 3.40 Total 13.24 9.54 7.63 11.22 The XY Company has offered to supply 2,000 kg. of product Q at a delivered price of 90% of EF's selling price. The company will then be able to produce extra product P in its place up to the plant's total capacity. Assume that the market can absorb the extra output and that XY's quality and delivery are acceptable