BBQ Company, a multi-billion-dollar company, is the world’s leading supplier of Banana-based products namely Banana Chips, Banana Milk, Banana Powder and their best seller, the Banana Cue. Data with respect to these products are as follows: Banana Chips Banana Milk Banana Powder Banana Cue Direct Materials 40 per unit 50 per unit 35 per unit 5 per unit Direct Labor 15 per unit 20 per unit 10 per unit 2 per unit Variable Overhead 5 per unit 10 per unit 5 per unit 1 per unit Fixed Overhead 2 per unit 4 per unit 2 per unit 0.4 per unit Variable selling and Admin Expenses 2 per unit 3 per unit 2 per unit 0.2 per unit Fixed Selling and Admin Expenses 0.5 per unit 0.75 per unit 0.5 per unit 0.05 per unit Selling Price 100 per unit 120 per unit 80 per unit 20 per unit True to its vision and mission to support the country where it was established, BBQ only acquires their raw materials (Banana) from local farmers in their country. In 2020, there was an outbreak of a virus which affected Banana plantations across the country even abroad. This virus prevents the Banana from producing Banana Blossom which would eventually lead to the death of the Banana. Because of this virus, the supply of Bananas needed by BBQ for the production of their products declined massively. According to the purchasing manager, BBQ could only get a hold of 100,000 kilos of Bananas. Despite the decrease in supply, the prices of banana in the market remained at50 per kilo. Due to fear of contracting the Banana Virus, the demand for Banana-based products also declined. Based on the recently conducted market research, the demand for each product is only 50,000 units. To maximize operating income, how many kilos of Banana shall be allocated to Banana Powder?
BBQ Company, a multi-billion-dollar company, is the world’s leading supplier of Banana-based products namely Banana Chips, Banana Milk, Banana Powder and their best seller, the Banana Cue. Data with respect to these products are as follows:
|
|
Banana Chips |
Banana Milk |
Banana Powder |
Banana Cue |
|
Direct Materials |
40 per unit |
50 per unit |
35 per unit |
5 per unit |
|
Direct Labor |
15 per unit |
20 per unit |
10 per unit |
2 per unit |
|
Variable |
5 per unit |
10 per unit |
5 per unit |
1 per unit |
|
Fixed Overhead |
2 per unit |
4 per unit |
2 per unit |
0.4 per unit |
|
Variable selling and Admin Expenses |
2 per unit |
3 per unit |
2 per unit |
0.2 per unit |
|
Fixed Selling and Admin Expenses |
0.5 per unit |
0.75 per unit |
0.5 per unit |
0.05 per unit |
|
Selling Price |
100 per unit |
120 per unit |
80 per unit |
20 per unit |
True to its vision and mission to support the country where it was established, BBQ only acquires their raw materials (Banana) from local farmers in their country.
In 2020, there was an outbreak of a virus which affected Banana plantations across the country even abroad. This virus prevents the Banana from producing Banana Blossom which would eventually lead to the death of the Banana. Because of this virus, the supply of Bananas needed by BBQ for the production of their products declined massively. According to the purchasing manager, BBQ could only get a hold of 100,000 kilos of Bananas. Despite the decrease in supply, the prices of banana in the market remained at50 per kilo.
Due to fear of contracting the Banana Virus, the demand for Banana-based products also declined. Based on the recently conducted
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