Reference no: EM132530263

Only Juice (Pty) Ltd manufactures two types of juice which they refer to as type A and Type B. Both are bottled in one litre glass bottles and both contain apples, pawpaw and coconut. The juice cannot be kept in inventory as it does not have a very long shelf life. The annual demand for the two types of juices is as follows: type A Type B Annual sales demand (units) 35 000 70 000 Both products are made in a machine, so there are no direct labour or variable overhead costs. The three types of fruits are the only variable costs for both types of juice. The recipes for one litre of each of the juices are presented below: type A Type B Apple (kg) 1.50 2.00 Pawpaw (kg) 0.60 0.40 Coconut (kg) 0.40 0.25 The selling price per litre of juice is R27.00 for type A and R20.00 for Type B. Both use bottles that cost R2.00 each. The fruit prices are R4.50 per kilogram of apples, R11.30 per kilogram of pawpaw and R14.80 per kilogram of coconut. The company only has access to 250 000 kilograms of apples per annum, 40 000 kilograms of pawpaw per annum and 20 000 kilograms of coconut per annum.

REQUIRED

Question 1. Calculate the contribution per litre for both types of juices.

Question 2. Determine whether any of the raw material fruit are limiting factors.

Question 3. Determine the maximum total contribution that can be made by calculating the contribution per limiting factor (if applicable).