Required:

1. Using Excel Solver, formulate a linear program to determine the optimal production mix which ensures that the maximum contribution margin is obtained. Discuss the key features of your results and why this was considered to be the optimal result (4 marks).
2. Discuss and suggest three possible ways in which the firm could improve the contribution margin in light of the above Solver analysis. Provide financial information to support your recommendations and clearly illustrate how your proposals impact the production mix and the firm's contribution margin (6 marks).

Ensure that your answers for the above are discussed and supported by relevant calculations/workings.

Skinny high rise High rise straight Flare jean Straight Leg Selling price $40.00 $50.00 $50.00 $50.00 Direct materials $7.50 $11.00 $10.50 $10.50 Direct labour $7.50 $9.75 $9.50 $9.50 Variable overhead $5.00 $7.00 $7.00 $7.00 Fixed overhead $5.00 $7.50 $7.50 $7.50 Each of these three products goes through the same manufacturing process. The time for each process and the hours available are provided in the table below. Skinny high rise Flare jean Straight Leg High rise straight Total hours available Process Fabric preparation 0.05 0.06 0.06 0.06 90,000 Pattern cutting 0.06 0.07 0.08 0.07 110,000 Stitching 0.08 0.09 0.09 0.09 130,000 Inspection and packing 0.02 0.03 0.03 0.03 45,000