Green Gnome Ltd produces garden fertilisers. The fertilisers are made into pellets which are sold in 5-kilogram

Question:

Green Gnome Ltd produces garden fertilisers. The fertilisers are made into pellets which are sold in 5-kilogram packets. The fertilisers are based on a basic mix of minerals and nutrients that make up 80% of each packet. To this basic mix are added special nutrients and minerals for special purpose fertilisers such as the lawn mix, the rose mix, the Australian native plant mix as well as a general mix, which is made up entirely of the basic mix.

Green Gnome Ltd can make up to 100 tonnes of the basic mix each year at a cost of $200000 and it needs to decide how to divide this between its four product lines. To some extent this is determined by how many 5-kilogram packets the company can sell of each product line.

The following data is relevant:


Product

Cost of 1kg of special nutrients and minerals


Selling price per 5 kg packet


Estimated maximum number of packets can sell

General Mix

Lawn Mix

Rose Mix

Australian Native Mix

Same as basic mix

$3

$4

$3


$20

$26

$30

$20


15000 packets

12000 packets

8000 packets

12000 packets


Required

Determine the most profitable mix of products given the amount of basic mix that can be produced each year and the estimated market for each product.

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Related Book For  book-img-for-question

Accounting

ISBN: 978-1118608227

9th edition

Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett

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