Blasius Ltd is a leading manufacturer of furniture in Ghana. The company manufactures these three garden furniture products – chair, bench and table. The budgeted unit cost and resource requirements of each of these items are detailed below:

These volumes are believed to equal the market demand for these products.
Fixed overhead costs are attributed to the three products on the basis of direct labour hours.
The cost of the timber is GH¢2.00 per square metre.

The products are made from a specialized timber. A memo from the purchasing manager advises you that because of a problem with the supplier, this specialized timber is limited in supply to 20,000 square metres per annum.
The sales director has already accepted an order for 500 chairs, 100 benches and 150 tables which if not supplied would incur a financial penalty of GH¢2,000. These quantities are NOT included in the market demand estimates above.

The selling prices of the three products are:
Chair      GH¢20.00
Bench     GH¢50.00
Table      GH¢40.00

Required:

Blasius Ltd has just decided to produce a new line of item namely bed that can be sold in its retail shops throughout the country.
It has provided you with the following information concerning the total cost of annual production and the prices at which that production could be sold:

Determine the optimal selling price for the bed. (4 marks)