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Question 2 Floral Ltd delivers bouquets of fresh flowers by post and produces three different bouquets Spring Posy, Classic Bouquet and Deluxe Bouquet. Details relating to the next month are as follows: Classic Deluxe Bouquet Bouquet Spring Posy 550 17,50 400 24.50 150 35.00 Demand in bouquets (units) Selling Price per bouquet (unit) Direct Materials: number of flower stems per bouquet Direct Materials: cost per flower stem Direct Labour: hours per bouquet 9 12 15 1.25 0.1 1.55 0.2 1.75 0.3 One bouquet is one unit of output. Direct labour is paid 11 per hour and fixed costs are 3,500 per month. The company can only acquire 10,800 flower stems of direct materials and has 200 direct labour hours available in a normal working month to meet demand. Required: (a) Identify whether direct material (flower stems) or direct labour is the limiting factor. (3 marks) (b) Calculate the contribution per limiting factor for each product and rank the products accordingly. (8 marks) (c) Determine the production plan that will optimise the monthly contribution showing the number of bouquets (units) of each product produced, the total contribution and the profit for the month. (8 marks) (d) Floral Ltd decides it needs to produce a minimum of 350 bouquets (units) of the product Classic Bouquet. Determine the revised production plan that will maximise the profit available if this criteria is met. (4 marks) (e) Explain why Floral Ltd may want to produce a minimum of 350 bouquets of the product Classic Bouquet and suggest how the company may overcome the resource constraint on production. (2 marks) (Total 25 marks)