Question
Fresh Farm Produce packages regular and organic vegetables. The regular vegetables are sold at $2 per pound, and the organic vegetables are sold at $4
Fresh Farm Produce packages regular and organic vegetables. The regular vegetables are sold at $2 per pound, and the organic vegetables are sold at $4 per pound. The variable cost of packaging the regular vegetables is $1.20 per pound. It costs an extra $0.80 to package the organic vegetables. It takes 6 labor hours to package 500 pounds of regular vegetables and 9 labor hours to package 500 pounds of organic vegetables. There are 1,200 hours of labor time available for production each week. The maximum weekly sales for the regular and organic vegetables are 10,000 and 4,000 pounds, respectively. Fixed production costs total $150,000 per year. All selling costs are fixed.
Required: (a) Calculate the optimal production level in number of pounds for each product. (b) Prepare the ledgers for both types of vegetables showing all necessary entries. (c) Compute the total contribution margin for the company.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started