QUESTION 1 (JUN 2010) Quality Bhd made and sold three products: SUN, MOON and STAR. Information regarding the products is given as follows: SUN MOON STAR Direct material usage (kg) 2 2.5 3 Direct labor hours 3 3 5 Variable overhead RM56 RM42 RM65 Budgeted sales: Sales revenue RM500,000 RM600,000 RM600,000 Selling price per unit RM200 RM200 RM300 Currently the material WIND can be bought at RM15.00 per kg and it is estimated to remain constant over the next period. Direct labor will be paid RM8.00 per hour worked. The fixed production overheads for the period are estimated to be RM295,000 and fixed selling and administration overheads are RM277,000. The current supplier has informed the company that they are unable to supply the material in the next period due to some problem. Therefore, the purchasing manager has conducted some survey and found that the material can be obtained from the different supplier where supplier A can supply 7,000 kg, supply B 6,000 kg and supply C 4,000 kg. Required: a) Determine the shortage of the material. b ) Advice the company on the most profitable mix of product to be produced based on the availability of the material. (show all the working) C) How much is the net profit of the company if the proposal in (b) is carried out? d) List four (4) disadvantages of determining the products to be produced based on ranking