Neem Agro Ltd, engaged in agricultural activities, has 500 hectares of virgin land, which can be based for growing jointly or individually tea, coffee and cardamom. The yield per hectare of the different crops and selling prices per kg are as follows:
|
|
Yield (kg) |
Selling Price (Rs. per kg) |
|
Tea |
2,500 |
25 |
|
Coffee |
625 |
50 |
|
Cardamom |
125 |
300 |
The Relevant Cost data are given as follows:
1. Variable Cost per kg:
|
Tea |
Coffee |
Cardamom |
|
|
Labour Charges |
10.00 |
12.50 |
150.00 |
|
Packing Materials |
2.50 |
2.50 |
12.50 |
|
Other Costs |
5.00 |
1.25 |
25.00 |
|
17.50 |
16.25 |
187.50 |
2. Fixed Cost per annum:
|
|
|
|
Cultivation and Growing Cost |
16,00,000 |
|
Administrative Cost |
4,50,000 |
|
Land Revenue |
2,75,000 |
|
Repairs and Maintenance |
5,00,000 |
|
Other Costs |
6,75,000 |
|
35,00,000 |
The policy of the company is to produce and sell all the three kinds of products and the maximum and minimum area to be cultivated per product are as follows:
|
|
Maximum Area (Hectares) |
Minimum Area (Hectares) |
|
Tea |
320 |
240 |
|
Coffee |
100 |
60 |
|
Cardamom |
60 |
20 |
Calculate the priority of production, the most profitable product mix and the maximum profit which can be achieved.