Advanced Management Accounting. Struggling to answer this question. Please help

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Advanced Management Accounting. Struggling to answer this question. Please help to solve this. Thank you

QUESTION 2 Rapture Sdn Bhd manufactures three perfumes: Sweetie, Cherry and Lovely. The selling prices and the marginal cost of each product are as follows: Sweetie Cherry Lovely RM RM RM Selling Price Marginal cost 220 84 340 104 440 48 The firm's fixed costs are RM150, 000 per annum. There is a shortage of a raw material called essence which is used in all three products. Sweetie uses 10ml, Cherry 10ml and Lovely 14ml. Only 200 L of essence will be available for the year. In addition, the market constraints are expected to restrict the production and sales of each product to: Sweetie: 9,000 units, Cherry: 7,000 units and Lovely: 6,000 units Required: Due to the essence constraint, show all workings to identify the profit ranking and allocation of essence for each perfume. (10 marks)

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Sweetie Cherry Lovely Selling price 220 340 440 Less: Marginal cost 84 104 148 Contributin margin C 136 236 292 essence required E 10 10 14 ml Contribution per ml C/E 13.6 23.6 20.9 Profit ranking 3 1 2 Max demand 9000 7000 6000 Maximum( 200*1000)ml 200000 Allocation- Production (in ml) 46000 70000 84000 (200000-70000-84000) (7000*10) (6000*14) Production contribution margin per unit Maximum profit Cherry 7000 units 136 952000 Lovely 6000 236 1416000 Sweetie 4600 units 292 1343200 3711200 Total maximum profit 3711200

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