From the following information, state which of the alternative sales mixes you would recommend to the management and why:

Product R

Product S

Selling Price per unit (Rs.)

25

20

Direct Materials per unit (Rs.)

8

6

Direct Wages

24 hours @

16 hours @

25 paise per hour

25 paise per hour

Fixed overheads — Rs. 750; Variable overheads — 150% of direct wages.

Alternative sales mix:

  1. 250 units of R and 250 units of S.
  2. Nil units of R and 400 units of S.
  3. 400 units of R and 100 units of S.