WE-B-NANNERS Inc. is a privately held banana processor located in San Jose, Costa Rica. We began processing bananas in 1968. Our only product is banana puree. Product is packaged in aseptic 55 gallon metal drums. Our customers are food processors, bakeries, juice and beverage producers, and dairies located in the USA.

Costa Rica has a tropical climate that is very favorable for growing bananas. During the harvesting season stalks of green bananas are transported from the plantations to the packing sheds where they are graded, inspected, prepared for transportation and loaded onto ocean going ships destined for global markets. Shippers of fresh, whole bananas, such as United Fruit, Dole, and Del Monte, require specific sizes and shapes of bananas. American consumers will not buy bananas with funny shapes or those deemed to be too big.

Misshapen and over-sized bananas are discarded by the fresh market suppliers during the grading and inspection processes. Millions of pounds of green, un-peeled bananas are discarded into a nearby river and float out into the ocean. Discarded bananas become the raw material for WE-B-NANNERS Inc. This is why our banana processing plant is located next to the fresh banana processors and the river.

The Process:

Our process begins with discarded bananas that cost nothing beyond the labor to salvage them from being tossed into the river. Although we process approximately 40 million pounds of bananas each year, we use only a small portion of the fruit that is flushed to the sea. We are developing additional products that will use more of the free raw materials.

Bananas are as green as grass at this stage of the process. They must be harvested while being deep green in color in order to survive the long ocean voyage. WE-B-NANNERS requires ripened bananas (yellow versus green). Our fruit is naturally ripened until a specific amount of sweet spots (brown) appear on the skin.

Ripened bananas are placed on conveyor belts that carry them past human peelers. Peeled bananas continue down the belts, while banana skins are tossed into waste containers and eventually make it into the river and on to the ocean. Peeled bananas are fed into machines that remove rag, seeds, spiders and other foreign materials. After the bananas are pureed and heat treated, ascorbic acid (vit C) is added to control color. After strict quality testing is performed, the banana puree is pumped into sterilized, plastic lined, 55 gallon, metal drums (barrels). The drums are sealed and transported to the shipping docks.

This process results in banana peelings, rag and seeds being left in Costa Rica. We ship only banana puree.

Production Schedule:

Production is scheduled during daylight hours, 12 hours per day, 7 days per week, during the months of June thru November. Thirteen (13) days are removed from the schedule for holidays and maintenance shut-down. Total work days scheduled per year = 170.

Production Capacity:

Our banana processing capacity is 240,000 pounds of puree per 12 hour shift.

Hourly Staffing:

Peelers = 60

Banana ripeners = 2

Maintenance mechanics = 4

Material Handlers = 4

Janitors = 2

Delivery truck drivers = 2

Armed guards = 3

Total = 77

Salaried Worker Staffing:

Supervisors = 4

Sales order processor = 1

Shipping clerk = 1

Receiving clerk = 1

Records keepers = 2

HR specialist = 1

Banana logistician = 1

Quality technicians = 2

General Manager = 1

Wages & Salaries:

Average hourly wage = $2.80 US

Average annual salary = $8,500 US

General Managers annual salary = $100,000 US

Note: Workers do not receive overtime premium pay.

Employee Benefits:

Hourly = 22% of hourly wage

Salary = 38 % of salary

Note: Round to closest whole $

Overhead Expenses per Year:

Depreciation (bldgs/equip) $250,000

Electricity, water, sewer, trash 54,400

Insurance 17,000

Maintenance Supplies 34,000

Janitor Supplies 8,500

Safety Supplies 5,100

Telephone 7,310

Internet Service 1,020

Lab Supplies 850

Fuel 20,400

Licenses & Fees 5,950

Total per year (add them up)

Overhead per 12 hour shift* __________

Overhead per Pound of Banana Puree** ___0._______

*Round to closest whole $

** Round to closest whole cent

Packaging:

Drums cost $47 each; capacity per drum = 468 pounds of puree

Calculate the Cost per Pound of Banana Puree (round to 3 decimals):

Raw Bananas ___________

Packaging (cost for drums) ___________

Hourly Labor ___________

Salaries ___________

Benefits ___________

Overhead ___________

Total cost per pound of banana puree ______________

Questions to answer:

1.If we want to make a 50% profit margin on sales dollars of our banana puree, what is the required selling price per pound?

2.What is the selling price per drum?

3.All of the above is based upon a 100% yield. Factoring in a 3.0% loss factor for the banana puree (prior to filling the drums). Calculate our new selling price per 468-pound drum that will yield a 50% profit margin.

4.If our customers pay ocean freight of $2250 per shipping container, each container holding 18,720 pounds of banana puree, plus a $2 per drum unloading fee, plus US Customs fees of $0.06 per pound of puree (net of drum weight), what is the landed cost of one pound of banana puree, sitting on a US dock? (Note: use cost per pound calculated in #3 above as base.)