Beruflich Dokumente
Kultur Dokumente
Canners Case
Exhibit 3.1
Product
24-212 whole
tomatoes
24-212 choice
peach halves
24-212 peach
nectar
24-212 tomato
juice
24-212 cooking
apples
24-212 tomato
paste
Exhibit 3.2
Product
Selling Price
Variable Costs:
Direct Labor
Variable OHD
Variable Selling
Packaging Mat'l.
Fruit1
Total Variable
Costs
Contribution
Less Allocated
OHD
Net Profit
Demand Forecasts
Selling Price per Demand Forecast
Case
(Cases)
$12.00
800,000
$16.20
10,000
$13.80
5,000
$13.50
50,000
$14.70
15,000
$11.40
80,000
24-212 Choice
Peach Halves
$16.20
3.54
0.72
1.2
2.1
3.24
4.2
0.96
0.9
1.68
5.4
3.81
0.69
1.2
1.8
5.1
3.96
1.08
2.55
1.95
3.6
10.8
1.2
13.14
3.06
12.6
1.2
13.14
0.36
0.84
0.36
2.1
0.96
1.56
-0.36
0.63
-0.27
Product
Whole Tomatoes
Peach Halves
Peach Nectar
Tomato Juice
Cooking Apples
Tomato Paste
18
18
17
20
27
25
Exhibit 3.3
24-212 Peach
24-212
Nectar
Tomato Juice
$13.80
$13.50
Product
Selling Price
Variable Cost
(excl. Tomato
costs)
Tomato Cost
Marginal Profit
Exhibit 3.4
Product
Selling Price
Variable Cost
(excl. Tomato
costs)
Tomato Cost
Marginal Profit
Canned Whole
Tomatoes
$12.00
Tomato Juice
$13.50
Tomato Paste
$11.40
$7.56
$4.44
$4.47
($0.03)
$9.54
$3.96
$3.72
$0.24
$5.85
$5.55
$3.90
$1.65
$7.56
$4.44
$4.47
($0.03)
$9.54
$3.96
$3.72
$0.24
Tomato Paste
$11.40
$5.85
$5.55
$2.33
$3.22
1.62
0.78
1.14
2.31
4.5
8.4
6.3
10.35
1.05
2.25
4.05
0.69
0.36
Q1)
Q2)
Q3)
From Exhibit 3, tomato cost for one case of Canned whole = [(15.54 x 18/4) + (27.96 x 18 x 3/4)]/100 = $4.47
Paste is most profitable (according to Myers); Use as much B as can be sold for paste, i.e., 2,000,000.
Use as much A and B for juice (next most profitable) as can be sold, while providing at least quality level 6.
Hence, use 600,000 A and 400,000 B for juice, whereby whole crop is used.
Myers is wrong because costs already paid ('sunk cost') are allocated to products.
Red Brand
Canners Case
AC
BC
AJ
BJ
AP
BP
Objective function
Contribution margins $0.247 $0.247 $0.198 $0.198 $0.222 $0.222
Profit
Tomato quantities 525,000 175,000 75,000 225,000
0
2,000,000 $676,300
Constraints
Canned
Juice
Paste
A limit
B limit
Canned quality
Juice quality
1
1
1
1
1
1
1
1
1
-3
1
3
-1
1
1
LHS
700,000
300,000
2,000,000
600,000
2,400,000
0
0
Red Brand
Canners Case
AC
BC
AJ
BJ
AP
BP
PC
PJ
PP
Objective function
Contribution margins $0.247 $0.247 $0.198 $0.198 $0.222 $0.222 -$0.008 -$0.057 -$0.033
Tomato quantities 600,000 205,000
0
195,000
0
2,000,000 15,000 65,000
0
Constraints
Canned
Juice
Paste
A limit
B limit
Canned quality
Juice quality
External A market
1
1
1
1
1
1
-3
1
1
1
1
1
-1
1
3
1
Profit
$677,620
LHS
820,000
260,000
2,000,000
600,000
2,400,000
0
0
80,000
<
<
<
<
<
>
>
<
RHS
Slack
14,400,000 13,580,000
1,000,000
740,000
2,000,000
0
600,000
0
2,400,000
0
0
0
0
0
80,000
0