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Manitoba Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Holstein cows raised on a special corn-based diet. One kilogram

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Manitoba Dairy, maker of specialty cheeses, produces a soft cheese from the milk of Holstein cows raised on a special corn-based diet. One kilogram of soft cheese, which has a contribution margin of $8, requires 4 litres of milk. A well-known gourmet restaurant has asked Manitoba Dairy to produce 2,000 kilograms of a hard cheese from the same milk of Holstein cows. Knowing that the dairy has sufficient unused capacity, Elise Princiotti, owner of Manitoba Dairy, calculates the costs of making 1 kilogram of the desired hard cheese: (Click the icon to view the costs for 1 kilogram of hard cheese.) Required Milk (10 litres x $1.50 per litre) Variable direct manufacturing labour Variable manufacturing overhead Fixed manufacturing cost allocated Total manufacturing cost $ 15 500 5 6 $ 31 1. Suppose Manitoba Dairy can acquire all the Holstein milk that it needs. What is the minimum price per kilogram it should charge for the hard cheese? 2. Now suppose that the Holstein milk is in short supply. Every kilogram of hard cheese produced by Manitoba Dairy will reduce the quantity of soft cheese that it can make and sell. What is the minimum price per kilogram it should charge to produce the hard cheese? per kilo. Requirement 1. Suppose Manitoba Dairy can acquire all the Holstein milk that it needs. What is the minimum price per kilogram it should charge for the hard cheese? If Manitoba Dairy can get all the Holstein milk it needs and has sufficient production capacity, then the minimum price per kilogram it should charge for the hard cheese is $ Requirement 2. Now suppose that the Holstein milk is in short supply. Every kilogram of hard cheese produced by Manitoba Dairy will reduce the quantity of soft cheese that it can make and sell. What is the minimum price per kilogram it should charge to produce the hard cheese? With the Holstein milk in short supply, determine the minimum price per kilogram it should charge to produce the hard cheese. Begin by determining the formula, and then calculate the minimum price. (Round your answers to one decimal place as needed.) Hard cheese +( Soft cheese Soft cheese X X Minimum price

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