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Homework answers / question archive / The Hawaiian Nut Company (HNC) makes four different products from macadamia nuts grown in the Hawaiian Islands: chocolatecoated whole nuts (Whole), chocolatecoated nut clusters (Clusters), chocolatecoated nut crunch bars (Crunch), and plain roasted nuts (Roasted)
The Hawaiian Nut Company (HNC) makes four different products from macadamia nuts grown in the Hawaiian Islands: chocolatecoated whole nuts (Whole), chocolatecoated nut clusters (Clusters), chocolatecoated nut crunch bars (Crunch), and plain roasted nuts (Roasted). The company is barely able to keep up with demand for these products. However, increasing raw materials prices and foreign competition are forcing HNC to watch its margins to ensure it is operating in the most efficient manner possible. To meet marketing demands for the coming week, HNC needs to produce at least 900 pounds of the Whole product, between 200 and 500 pounds of the Cluster product, no more than 150 pounds of the Crunch product, and no more than 250 pounds of the Roasted product.
Each pound of the Whole, Cluster, Crunch, and Roasted product contains, respectively, 60%, 40%, 20% and 100% macadamia nuts with the remaining weight made up of chocolate coating. The company has 1,100 pounds of macadamia nuts and 800 pounds of chocolate available for use in the next week. The various products are made using four different machines that hull the nuts, roast the nuts, coat the nuts in chocolate (if needed), and package the product. The following table summarizes the time required by each product on each machine. Each machine has 60 hours of time available in the coming week.

Minutes Required Per Pound 

Machine 
Whole 
Cluster 
Crunch 
Roasted 
Hulling 
1.00 
1.00 
1.00 
1.00 
Roasting 
2.00 
1.50 
1.00 
1.75 
Coating 
1.00 
0.70 
0.20 
0.00 
Packaging 
2.50 
1.60 
1.25 
1.00 
The controller recently presented management with the following financial summary of HNC’s average weekly operations over the past quarter (next page). From this report, the controller is arguing that the company should cease producing its Cluster and Crunch products.

Whole 
Cluster 
Crunch 
Roasted 
Total 
Sales Revenue 
$5,125.00 
$1,800.00 
$500.00 
$930.00 
$8,355.00 
Variable Costs 






$1,330.00 
$560.00 
$122.50 
$320.00 
$2,332.50 

$1,081.50 
$400.00 
$95.00 
$130.00 
$1,706.50 

$330.00 
$140.00 
$45.00 
$90.00 
$605.00 

$550.00 
$180.00 
$65.00 
$120.00 
$915.00 
Allocated Fixed Costs 






$659.72 
$347.22 
$104.17 
$138.89 
$1,250 

$554.17 
$291.67 
$87.50 
$116.67 
$1,050 
Net Profit 
$620 
($119) 
($19) 
$14 
$496 
Pounds Sold 
950 
500 
150 
200 
1800 
Net Profit Per Pound 
$0.65 
($0.24) 
($0.13) 
$0.07 
$0.28 
Perform the tasks outlined in the order provided below. You should have only one model worksheet in your Excel workbook. Include a worksheet tab labelled ‘Answers’ on which you will answer questions for Tasks 1 & 4.