QUESTION 2 (8 MARKS)
Byllo Sdn. Bhd. is planning to buy a new machine for the manufacturing of product KeW. There
are THREE (3) alternatives of machine to consider; NEW1, NEW2 and NEW3. Selling price for
the product KeW is RM50.00 per unit. Table 2 shows other information for each machine.
Table 2: Data on each machine
Description NEW1 NEW2 NEW3
Material cost (RM/unit) 8 13.5 15
Utility cost (RM/unit) 2 1.5 3
Machine purchasing price (RM) 44,000 35,000 20,000
Space rental and renovation (RM) 2,000 1,000 1,000
a. Sketch graphs with appropriate label for all alternatives. Suggest the economical production
range for each machine. (3 marks)
b. If the demand of product is 4,000 units, determine which machine is the most not economical
to be purchased. Justify your answer based on the cost calculations. (2 marks)
c. Calculate the production quantity for machine NEW2 and NEW3 to achieve the same profit.
You are allowed to make any reasonable assumption. (3 marks)