Danoly is a company that manufactures 3 products Milk, Natural Yoghurt and Fruit Yoghurt The company is divided in 3 profit centers, each producing one product Until now, each division has to satisfy, firstly, the internal demand before it can satisfy the demand from the external market The selling price for internal or external demand is the same Two units of milk are needed to produce one unit of natural yoghurt and one unit of natural yoghurt is needed to produce one unit of fruit yoghurt The expected Profit Loss Account for next year is as follow Table A Milk Natural yoghurt Fruit yoghurt Sales 400 000 200 000 350 000 Direct materials Gross milk 200 000 Milk 100 000 Natural yoghurt 200 000 Fruit 20 000 Other variable costs 150 000 20 000 80 000 Contribution margin 50 000 80 000 50 000 Fixed costs 30 000 20 000 10 000 EBT 20 000 60 000 40 000 Other information Table B Milk Natural yoghurt Fruit yoghurt External Demand (units) 300 000 100 000 50 000 Internal Demand (units) 100 000 50 000 0 Installed capacity (units) 500 000 50 000 100 000 Used capacity 80 100 50 Market selling price per unit 1 4 7 Number of machine hours used per unit produced 1 3 2 However, due to the damage of a machine (used to produce all the 3 products), the capacity of production will have to be reduced to 200 000 Machine hours Which product mix will maximize the profit for the company as a whole What is the expected contribution margin Imagine now that the company could repair fix the machine on time of the production for next year, and the installed capacity available is the one mentioned in Table B The Natural yoghurt division receives a special order for a new client that is willing to pay 50 500 for it This order requires 20 000 units of milk and 23 000 of other variable costs If the division accepts this special order, it will reduce the production of natural yoghurt in 5 000 units Thinking the Company as a whole, do you think it should accept this special order Show your supporting calculations

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Danoly is a company that manufactures 3 products: Milk, Natural Yoghurt and Fruit Yoghurt. The company is divided in 3 profit centers, each producing one

Danoly is a company that manufactures 3 products: Milk, Natural Yoghurt and Fruit Yoghurt. The company is divided in 3 profit centers, each producing one product. Until now, each division has to satisfy, firstly, the internal demand before it can satisfy the demand from the external market. The selling price for internal or external demand is the same.

Two units of milk are needed to produce one unit of natural yoghurt and one unit of natural yoghurt is needed to produce one unit of fruit yoghurt.

The expected Profit & Loss Account for next year is as follow:

Table A	Milk	Natural yoghurt	Fruit yoghurt
Sales	400.000	200.000	350.000
Direct materials
Gross milk	200.000	-	-
Milk	-	100.000	-
Natural yoghurt	-	-	200.000
Fruit	-	-	20.000
Other variable costs	150.000	20.000	80.000
Contribution margin	50.000	80.000	50.000
Fixed costs	30.000	20.000	10.000
EBT	20.000	60.000	40.000

Other information:

Table B	Milk	Natural yoghurt	Fruit yoghurt
External Demand (units)	300.000	100.000	50.000
Internal Demand (units)	100.000	50.000	0
Installed capacity (units)	500.000	50.000	100.000
Used capacity	80%	100%	50%
Market selling price per unit	1	4	7
Number of machine hours used per unit produced	1	3	2

However, due to the damage of a machine (used to produce all the 3 products), the capacity of production will have to be reduced to 200.000 Machine hours.

Which product mix will maximize the profit for the company as a whole? What is the expected contribution margin?

Imagine now that the company could repair/fix the machine on time of the production for next year, and the installed capacity available is the one mentioned in Table B.

The Natural yoghurt division receives a special order for a new client that is willing to pay 50.500 for it. This order requires 20.000 units of milk and 23.000 of other variable costs. If the division accepts this special order, it will reduce the production of natural yoghurt in 5.000 units.

Thinking the Company as a whole, do you think it should accept this special order? Show your supporting calculations.