A corporate agricultural organization has three separate farms which are to be used during the coming year. Each farm has unique characteristics which make it most suitable for raising one crop only. Table below indicates the crop selected for each farm, the annual cost of planting 1 acre of the crop, the expected revenue to be derived from each acre, and the fixed costs associated with operating each farm. In addition to the fixed costs associated with operating each farm, there are annual fixed costs of $75,000 for the corporation as a whole. Cost/Acre (c) $900 $1,100 $750 Revenue/Acre (r) $1,300 $1,650 $1,200 Fixed Cost (F) $150,000 $175,000 $125,000 Farm Crop Soya beans Corn 1 Potatoes Table 2 a) Determine the profit function for the three-farm operation. b) What are the expected profits for the program if the board of directors has voted on the following planting program for the coming year; 1,000 acres will be planted at farm 1, 1,600 at farm 2 and 1,550 at farm 3? c) A Summer drought has resulted in the revenue yields per acre being reduced by 20, 30 and 10 percent, respectively, at the three farms. What is the profit expected from the mentioned planting program?

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ISBN:9780470458365
Author:Erwin Kreyszig
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corporate agricultural organization has three separate farms which are to be used during the coming year. Each farm has unique characteristics which make it most suitable for raising one crop only. Table below indicates the crop selected for each farm, the annual cost of planting 1 acre of the crop, the expected revenue to be derived from each acre, and the fixed costs associated with operating each farm. In addition to the fixed costs associated with operating each farm, there are annual fixed costs of $75,000 for the corporation as a whole.

A corporate agricultural organization has three separate farms which are to be used
during the coming year. Each farm has unique characteristics which make it most
suitable for raising one crop only. Table below indicates the crop selected for each farm,
the annual cost of planting 1 acre of the crop, the expected revenue to be derived from
each acre, and the fixed costs associated with operating each farm. In addition to the
fixed costs associated with operating each farm, there are annual fixed costs of
$75,000 for the corporation as a whole.
Cost/Acre (c)
$900
$1,100
$750
Revenue/Acre (r)
$1,300
$1,650
$1,200
Fixed Cost (F)
$150,000
$175,000
$125,000
Farm
Crop
Soya beans
Corn
1
Potatoes
Table 2
a) Determine the profit function for the three-farm operation.
b) What are the expected profits for the program if the board of directors has voted on
the following planting program for the coming year; 1,000 acres will be planted at
farm 1, 1,600 at farm 2 and 1,550 at farm 3?
c) A Summer drought has resulted in the revenue yields per acre being reduced by 20,
30 and 10 percent, respectively, at the three farms. What is the profit expected from
the mentioned planting program?
Transcribed Image Text:A corporate agricultural organization has three separate farms which are to be used during the coming year. Each farm has unique characteristics which make it most suitable for raising one crop only. Table below indicates the crop selected for each farm, the annual cost of planting 1 acre of the crop, the expected revenue to be derived from each acre, and the fixed costs associated with operating each farm. In addition to the fixed costs associated with operating each farm, there are annual fixed costs of $75,000 for the corporation as a whole. Cost/Acre (c) $900 $1,100 $750 Revenue/Acre (r) $1,300 $1,650 $1,200 Fixed Cost (F) $150,000 $175,000 $125,000 Farm Crop Soya beans Corn 1 Potatoes Table 2 a) Determine the profit function for the three-farm operation. b) What are the expected profits for the program if the board of directors has voted on the following planting program for the coming year; 1,000 acres will be planted at farm 1, 1,600 at farm 2 and 1,550 at farm 3? c) A Summer drought has resulted in the revenue yields per acre being reduced by 20, 30 and 10 percent, respectively, at the three farms. What is the profit expected from the mentioned planting program?
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