QUESTION 1 Santosh Goswami (a market gardener) is planning his production for next season, and has asked you as a cost accountant, to recommend the optimal mix of vegetable production for the coming year. He has given you the following data relating to the current year: Particulars Potatoes Turnips Parsnips Carrots Area occupied (acres) 25 20 30 25 Output (in tonnes) per acre 10 8 9 12 Selling price per tonne ($) 100 125 150 135 Variable cost per acre ($) Fertilizers 30 25 45 40 Seeds 15 20 25 Pesticides 25 15 20 25 Direct wages 400 450 500 570 30 Additional Information: (0) Fixed overhead per annum $54,000. (ii) The land that is being used for the production of carrots and parsnips can be used for either crop, but not for potatoes or turnips. The land being used for potatoes and turnips can be used for either crop, but not for carrots or parsnips. In order to provide an adequate market service, Santosh must produce, each year, at least 40 tonnes each of potatoes and turnips and 36 tonnes each of parsnips and carrots. REQUIRED: (a) Present an income statement that shows: The profit for the current year; (ii) The profit for the optimal production mix that you would recommend. (b) Assume that the land could be cultivated in such a way that any of the above crops could be produced and that there was no market commitment, you are required to: (0) Advise Santosh which crop he should concentrate his production on; and (ii) Calculate the profit based on your advice in (b)(i) ensuring you show workings