Question
Instructions: You have been hired as an external consultant by Orange Juice Incorporated (OJI) to advise them on their cost of setting up an orange
Instructions: You have been hired as an external consultant by Orange Juice Incorporated (OJI) to advise them on their cost of setting up an orange juice producing facility in southern NSW. Please provide advice to the questions provided by the CEO (Dr Pulp) below. .
NSW Orange Juice Project A foreign investor, Orange Juice Incorporated (OJI) is considering establishing an irrigated orange juice-growing/processing project in Southern NSW in the Riverina district. Orange Juice production is represented by a competitive industry and a market determined wholesale price of $6.90 per litre. It is estimated that each hectare (Ha) of land used for the production of orange juice will produce 200 trees. Fruit yield per tree is 22kg. Juice yield is expected to be 0.40 litres per kg of fruit.
Questions:
1a. Calculate total trees, fruit yield (in kg) and output of orange juice (in litres) for 100, 150, 200, 250, 300, 350, 400, 450, 500 and 550 Ha of total land use and present your answers in a table format (half a mark for each set of output related estimates = 1.5 marks)
1b. For each of the juice yield output levels, calculate the total fixed cost, total variable cost, total cost, average fixed cost, average variable cost, average total cost and marginal cost and present your answers in a table format and to two decimal places (1.5 marks for each set of cost estimates = 10.5 marks).
2a. Using a chart created in Excel, provide an illustration of the total cost, total variable cost and total fixed cost (3 marks).
2b. Using a chart created in Excel, provide an illustration of average total cost, average variable cost and average fixed cost and marginal cost (4 marks).
3a. Why do the average costs curves and marginal cost curve demonstrate a U-shape as shown in 2b? (in your answer refer to the respective quantity of litres) (3 marks).
3b. How many litres of orange juice should the business produce? Why? Explain your answer by referring to the profit maximising condition (3 marks).
Please try to reply with question as soon as possible (urgent)
The following fixed operating cost schedule is provided: The following schedule applies to all variable costs: The following fixed operating cost schedule is provided: The following schedule applies to all variable costs
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