SECTION B - ANSWER TWO QUESTIONS ONLY (OUT OF THREE) QUESTION 2 (32 marks). Pastels Ltd produces three brush sets; the artists set, the painters set and the make-up set. The following data for each brush is available for the next quarter: Demand sets (units) 150 300 350 Artist Painters Make up Sale Revenue per unit 43 35 25 Variable costs per unit 37 27 Allocated Fixed costs per unit Profit per unit (1) 7 2 6 16 4 5 2a) The assistant accountant has suggested that the Artist line be closed. Do you agree? Give reasons for your opinion. 5 marks (type your answer here) All brush sets use animal hair as follows: Artist Painters Make up Hair per set (grammes) 12 20 36 2b) The supplier for animal hair has gone bankrupt and supply will be affected for the next quarter. With reference to the above explain the concept of a limiting factor. 2 marks 2c) The inventory manager has told you that there is only 7,600 6 grammes of animal hair in the warehouse. How much of each product marks should be made? (type in this box) 2d) What is the maximum profit that Pastels Ltd could make given your calculations in part 2c? (type in this box) 4 marks 5 marks 2e) State the total maximum price that Pastels would be prepared to pay a competitor for any animal hair inventory they have, in order to fulfil demand for the quarter. (type in this box) 2f) Discuss two qualitative (non-financial factors) the company should consider when sourcing animal hair from overseas suppliers. (type in this box) 4 marks (type in this box) 2g) The company intends to buy a machine to help speed up production. Discuss how and why this could affect costs and profits. marks 6 marks