Need quantity and profit from internall facility

11.13 Multiple Key Factor - Make or Buy Decision - Process Sub-Contracting - Different Alternatives M03 Vallabh Company manufactures two products EXE and WYE, which pass through two of its Departments exclusively used for them. A market research study conducted by the Company reveals that the Company can sell either 38,500 units of EXE or 31,500 units of WYE in a year. The Manufacturing Cost and Selling Price details are --- Particulars EXE (*) WYER) Selling Price per unit 375 540 Costs: Department 1: Direct Materials 58 100 Direct Labour 5 Hours 50 7.5 Hours 75 Department 2: Direct Materials 21 26 Direct Labour 7.5 Hours 90 10 Hours 120 Overheads Dept 1 Dept 2 Variable Overhead Rate per Direct Labour Hour 2.40 3.60 Fixed Overheads 35,00,000 10,00,000 Budgeted Direct Labour Hours 1,75,000 2,80,000 As the quantity which can be sold exceeded the production capacity, the Company has been considering the use of sub- contracting production facilities. Accordingly, when tenders were floated, two contractors responded as under - 1. Contractor DS offers to produce upto a maximum of 17,500 units of EXE or 14,000 units of WYE in a year for the type of work done by Department 1 of the Company. The price charged by DS is 138 per unit of EXE and 212 per unit of WYE. These prices included the Cost of Direct Materials used in Department 1 of the Company. 2. Contractor DW can produce upto a maximum of 11,200 units EXE and 7,000 units of WYE in year for the type of work done by Department 2 of the Company. The price charged by DW is 150 per unit of EXE and