Question

Fruit Ltd makes 3 types of products: Cherry, Blueberry and Strawberry. Extracts from the budget for the next year are as follows: Cherry Blueberry Strawberry Demand and production (units) 2,000 3,000 4,000 The following information is per unit of each product Per unit Cherry Blueberry Strawberry AED AED AED Selling price 174 340 308 Materials 30 80 60 Labour 40 100 80 Variable overhead 24 60 48 Each product uses a standard material component called a seed. Seeds are 10 AED per unit. The company expects the total fixed cost budget to be AED 120,000 Required: Part (a). It has now been realised that there will only be 35,000 seeds available next year. Calculate the production plan that will maximise profit for Fruit Ltd for the next year. State what that plan will be (All workings must be shown

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Answer to a math question Fruit Ltd makes 3 types of products: Cherry, Blueberry and Strawberry. Extracts from the budget for the next year are as follows: Cherry Blueberry Strawberry Demand and production (units) 2,000 3,000 4,000 The following information is per unit of each product Per unit Cherry Blueberry Strawberry AED AED AED Selling price 174 340 308 Materials 30 80 60 Labour 40 100 80 Variable overhead 24 60 48 Each product uses a standard material component called a seed. Seeds are 10 AED per unit. The company expects the total fixed cost budget to be AED 120,000 Required: Part (a). It has now been realised that there will only be 35,000 seeds available next year. Calculate the production plan that will maximise profit for Fruit Ltd for the next year. State what that plan will be (All workings must be shown

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Corbin
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106 Answers
Given the constraints and information provided, we first need to calculate the contribution per unit for each product. The contribution per unit is calculated as follows:

Contribution per unit = Selling price per unit - (Materials per unit + Labour per unit + Variable overhead per unit + Seed cost per unit)

Let's calculate the contribution per unit for each product:

For Cherry:
\text{Contribution per unit} = 174 - (30 + 40 + 24 + 10) = 70 \text{ AED}

For Blueberry:
\text{Contribution per unit} = 340 - (80 + 100 + 60 + 10) = 90 \text{ AED}

For Strawberry:
\text{Contribution per unit} = 308 - (60 + 80 + 48 + 10) = 110 \text{ AED}

Next, we need to consider the seed limitation and the production plan that maximizes profit given the availability of seeds. The total number of seeds available is 35,000.

We will prioritize the production of each product based on their contribution per unit. The optimal production plan is as follows:

1. Produce 4,000 units of Strawberry, utilizing 4,000 seeds, with a total contribution of 4,000 \times 110 = 440,000 \text{ AED}.
2. Produce 3,000 units of Blueberry, utilizing the next 3,000 seeds, with a total contribution of 3,000 \times 90 = 270,000 \text{ AED}.
3. Produce 2,000 units of Cherry, using the remaining 2,000 seeds, with a total contribution of 2,000 \times 70 = 140,000 \text{ AED}.

Therefore, the production plan that will maximize profit for Fruit Ltd for the next year with 35,000 seeds available is as follows:

- Produce 4,000 units of Strawberry
- Produce 3,000 units of Blueberry
- Produce 2,000 units of Cherry

The total contribution from this production plan is 850,000 AED.

\boxed{\text{Answer: Total Contribution is 850,000 AED}}

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