Problem: PRODU TJ's, Inc., makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes, referred to as the Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different percentages of five types of nuts. In preparation for the fall season, TJ's has just purchased the following shipments of nuts at the prices shown: Shipment Amount (pounds) Type of Nut Cost per Shipment (S) Almond 6000 7500 Brazil 7500 7125 Filbert 7500 6750 Pecan 6000 7200 7875 Walnut The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts. The Deluxe 7500 Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25% almonds, 15% Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts. TJ's accountant analyzed the cost of packaging materials, sales price per pound, and so forth, and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets. Customer orders already received are summarized here: Type of Mix Orders (pounds) 10,000 3,000 5,000 Regular Deluxe Holiday Because demand is running high, it is expected that TJ's will receive many more orders than can be satisfied. TJ's is committed to using the available nuts to maximize profit over the fall season; nuts not used will be given to a local charity. Even if it is not profitable to do so, TJ's president indicated that the orders already received must be satisfied. Managerial Report Perform an analysis of TI's product-mix problem, and prepare a report for TJ's president that summarizes your findings. Be sure to include information and analysis on the following: 1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes. 2. The optimal product mix and the total profit contribution. 3. Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts can be purchased. 4. A recommendation as to whether TJ's should purchase an additional 1000 pounds of almonds for $1000 from a supplier who overbought. S. Recommendations on how profit contribution could be increased (if at all) if T's does not satisfy all existing orders.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Solution to problem
Solution to problem 4, 5
2,3
Optimal Objective Value
Optimal Objective Value
66333.333
61375
Variable
Value Reduced Cost
Variable
Value
Reduced Cost
R
17500
11666.6667
D
10825
D
17916.6667
so00
5000
Description
Slack
Slack
Constraint
Dual Value
Constraint
Dual Value
Surplus
Surplus
Almonds
8.5
1
416.66667
Brazil
2
250
250
Filberts
3
250
250
Pecans
4
875
4
5.66667
Walnuts
1.5
4.33333
Regular
7500
6
1666.66667
Deluxe
7
7625
14916.66667
Holiday
-0.175
-0.03333
Objective Allowable
Allowable
Objective
Allowable
Allowable
Coefficient
Increase
Decrease
Coefficient Increase
Decrease
1.65
0.35
0.15
1.65
0.1
0.65
2
02
0.10769
1.3
0.02353
2.25
0.175
Infinite
2.25
0.03333
Infinite
RHS
Allowable
Allowable
RHS
Allowable
Allowable
Value
Increase
Decrease
Value
Increase
Decrease
6000 583.33333
610
7000
Infinite
416.66667
7500
Infinite
250
7500
Infinite
250
7500
Infinite
250
7500
Infinite
250
6000
Infinite
875
6000
250
1790
7500
10000
250
750
7500
250
250
7500
Infinite
10000 1666.66667
Infinite
3000
7625
Infinite
3000 14916.6666
Infinite
5000
so00
5000 10529.4117
5000
4692 3
Transcribed Image Text:Solution to problem Solution to problem 4, 5 2,3 Optimal Objective Value Optimal Objective Value 66333.333 61375 Variable Value Reduced Cost Variable Value Reduced Cost R 17500 11666.6667 D 10825 D 17916.6667 so00 5000 Description Slack Slack Constraint Dual Value Constraint Dual Value Surplus Surplus Almonds 8.5 1 416.66667 Brazil 2 250 250 Filberts 3 250 250 Pecans 4 875 4 5.66667 Walnuts 1.5 4.33333 Regular 7500 6 1666.66667 Deluxe 7 7625 14916.66667 Holiday -0.175 -0.03333 Objective Allowable Allowable Objective Allowable Allowable Coefficient Increase Decrease Coefficient Increase Decrease 1.65 0.35 0.15 1.65 0.1 0.65 2 02 0.10769 1.3 0.02353 2.25 0.175 Infinite 2.25 0.03333 Infinite RHS Allowable Allowable RHS Allowable Allowable Value Increase Decrease Value Increase Decrease 6000 583.33333 610 7000 Infinite 416.66667 7500 Infinite 250 7500 Infinite 250 7500 Infinite 250 7500 Infinite 250 6000 Infinite 875 6000 250 1790 7500 10000 250 750 7500 250 250 7500 Infinite 10000 1666.66667 Infinite 3000 7625 Infinite 3000 14916.6666 Infinite 5000 so00 5000 10529.4117 5000 4692 3
Problem: PRODUCT MIX
TJs,Inc, makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes, referred to as the
Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different percentages of five types of nuts. In
preparation for the fall season, TJ's has just purchased the following shipments of nuts at the prices shown:
Shipment Amount (pounds)
Type of Nut
Cost per Shipment (S)
Almond
6000
7500
Brazil
7500
7125
Filbert
7500
6750
Pecan
6000
7200
Walnut
7500
7875
The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts. The Deluxe
Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25% almonds, 15% Brazil nuts, 15% filberts,
25% pecans, and 20% walnuts. TJ's accountant analyzed the cost of packaging materials, sales price per pound, and so
forth, and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix,
and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the different mixes
because that cost can vary greatly in the commodity markets. Customer orders already received are summarized here:
Type of Mix Orders (pounds)
Regular
Deluxe
Holiday
10,000
3,000
5,000
Because demand is running high, it is expected that TJ's will receive many more orders than can be satisfied. TJ's is
committed to using the available nuts to maximize profit over the fall season; nuts not used will be given to a local
charity. Even if it is not profitable to do so, TJ's president indicated that the orders already received must be satisfied.
Managerial Report
Perform an analysis of TJ's product-mix problem, and prepare a report for TJ's president that summarizes your
findings. Be sure to include information and analysis on the following:
1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes.
2. The optimal product mix and the total profit contribution.
3. Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts can be
purchased.
4. A recommendation as to whether TJ's should purchase an additional 1000 pounds of almonds for $1000 from a
supplier who overbought.
5. Recommendations on how profit contribution could be increased (if at all) if TJ's does not satisfy all existing
orders.
Transcribed Image Text:Problem: PRODUCT MIX TJs,Inc, makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes, referred to as the Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different percentages of five types of nuts. In preparation for the fall season, TJ's has just purchased the following shipments of nuts at the prices shown: Shipment Amount (pounds) Type of Nut Cost per Shipment (S) Almond 6000 7500 Brazil 7500 7125 Filbert 7500 6750 Pecan 6000 7200 Walnut 7500 7875 The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts. The Deluxe Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25% almonds, 15% Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts. TJ's accountant analyzed the cost of packaging materials, sales price per pound, and so forth, and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets. Customer orders already received are summarized here: Type of Mix Orders (pounds) Regular Deluxe Holiday 10,000 3,000 5,000 Because demand is running high, it is expected that TJ's will receive many more orders than can be satisfied. TJ's is committed to using the available nuts to maximize profit over the fall season; nuts not used will be given to a local charity. Even if it is not profitable to do so, TJ's president indicated that the orders already received must be satisfied. Managerial Report Perform an analysis of TJ's product-mix problem, and prepare a report for TJ's president that summarizes your findings. Be sure to include information and analysis on the following: 1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes. 2. The optimal product mix and the total profit contribution. 3. Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts can be purchased. 4. A recommendation as to whether TJ's should purchase an additional 1000 pounds of almonds for $1000 from a supplier who overbought. 5. Recommendations on how profit contribution could be increased (if at all) if TJ's does not satisfy all existing orders.
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