Two neighbouring farmers can use either high or low quantities of fertilizer. If they both use low quantities, then they each earn $1,200,000. If they both use high quantities, then they each earn $900,000. If one of the farmers uses low quantities and the other uses high quantities, then they respectively earn $500,000 and $1,000,000. What fine on high pesticide use causes both farmers to adopt a low quantity strategy? What other strategies can you suggest to cut down the amount of pesticide usage?

Two neighbouring farmers can use either high or low quantities of fertilizer. If they both use low quantities, then they each earn $1,200,000. If they both use high quantities, then they each earn $900,000. If one of the farmers uses low quantities and the other uses high quantities, then they respectively earn $500,000 and $1,000,000. What fine on high pesticide use causes both farmers to adopt a low quantity strategy? What other strategies can you suggest to cut down the amount of pesticide usage?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 23E: Coyle Pharmaceuticals produces two organic chemicals (Org AB and Org XY) used in the production of...

See similar textbooks

Similar questions

If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he expects a crop of 50,000 bushels. The cost of pesticides is $30,000 and the other costs associated with planting and harvesting the crop total $450,000. The price of corn at harvest time will either be $9.00 with probability of 0.50 or it will be $11.00 with probability 0.50, so if the farmer decides to sell the crop at harvest, the expected price per bushel that he will receive is $10.00. If the farmer uses pesticide and decides to sell the crop at harvest, what is his expected profit? a. $120,000.00 b. $150,000.00 c. $180,000.00 d. $20,000.00
A farmer in Vancouver faces a dilemma. The weather forecast is for hot weather, and there is a 50% chance that the temperature this weekend will be too hot and destroy his entire flower garden, which is worth some $60,000. He can take two possible actions to try to alleviate his loss if the temperature rises (the objective is to maximize his expected flower value). First, he could use mulch which helps keep soil temperatures low. This would cost $3,000, but he could still expect to incur damage of approximately $27,000 to $32,000. Second, he can use shade cloth which offers partial and temporary protection from the sun. This method is more expensive ($6,000), and also more effective. With the shade cloth, he could expect to incur as much as $16,000 to $22,000 of the loss. Compare the farmers expected values for the three alternatives he has, considering the various possible loss scenarios for the mulch and the shade cloth. Which alternative would you suggest the farmer take? Why?…
Cluck Farms, Inc. produces a crop of chickens at a total cost of $66,000. The production generates 60,000 chickens that can be sold for $1.50 each to a slaughtering company, or the chickens can be slaughtered in house and then sold for $2.75 each. It costs $55,000 more to turn the annual chicken crop into chicken meat. Question: If Chuck Farms slaughters the chickens, how much is the incremental profit or loss?
A farmer in Mankweng is considering replacing 150 hectares of lettuce with 150 hectares of cucumbers. Consider the cost and income information below related to the two enterprises Lettuce Expected yield 6.3 ton/ha Cucumber Expected yeild 5.7 ton/ha Lettuce Input cost per ton R 1 320 Cucumber Input cost per ton R 1 270 Lettuce Expected selling price per ton R 3 200 Cucumber Expected selling price per ton R4 150. I. Calculate the expected change in net income for the farmer’s proposed change. II. Briefly advise the farmer if the change is desirable or not.
The Deer Valley Farm produces a natural organic fertil-izer, which it sells mostly to gardeners and homeowners. The annual demand for fertilizer is 220,000 pounds. Thefarm is able to produce 305,000 pounds annually. Thecost to transport the fertilizer from the plant to the farmis $620 per load. The annual carrying cost is $0.12 perpound.a. Compute the optimal order size, the maximum inventorylevel, and the total minimum cost.b. If the farm can increase production capacity to 360,000pounds per year, will it reduce total inventory cost?
You are a business analyst who develop solutions to some farm business problems.One of the difficulties in maintaining a farm is the existence of harmful pests.You were able to find out that the cost ? in pesos of removing ? amount (inpercent) of pests is given by the equation P = 500 000x / (1 - x). Make a businesspresentation that includes the following: a. Cost in removing 25%, 50%, and 75% of pests b. Amount of pests removed with the following conditions:- Cost will be no more than ₱750,000- Cost will be ₱2,000 000 or less- Cost will not go beyond ₱4,500 000
A horticulturist has just set up vegetable cultivation in a greenhouse where he grows peppers and tomatoes using sustainable energy sources, electricity for lighting and thermal energy for heating. He grows x units of peppers and y units of tomatoes. The entire amount that the farmer grows is sent to the market. The cost function of the crop is described as follows equation: ?(?, ?) = 12?2 + 24?2 The lighting's capacity means that it cannot grow more than 5,000 units in total per month. a. What should be the division between the production of peppers and tomatoes to minimize cost per month with the aim of always fully utilizing the capacity of the greenhouse? What is this minimum cost per month? b. Explain the significance of calculating the Lagrange multiplier i.e. interpret and at the same time discuss how it can be used to calculate if more productive lighting is obtained in the greenhouse and the cultivation will be 5,750 units per month.
A chemical company spent $480,000 to produce 144,000 gallons of a chemical, which can be sold for $4.32 per gallon. The chemical can be further processed into a weed killer which can be sold for $6.40 per gallon; it will cost $256,320 to process the chemical into a weed killer. Should the company sell or process further? **Show your work to support your answer.
The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $600,000. The line’s book value is $200,000, and Fleming management feels it could be sold at this time for $150,000. A new, increased capacity line can be purchased for $1,200,000. Delivery and installation of the new line are expected to cost an additional $100,000. Assuming Fleming’s marginal tax rate is 40%, calculate the net investment for the new line.
Coyle Pharmaceuticals produces two organic chemicals (Org AB and Org XY) used in the production of two of its most wide-selling anti-cancer drugs. The controller and environmental manager have identified the following environmental activities and costs associated with the two products: Required: 1. Calculate the environmental cost per pound for each product. Which of the two products appears to cause the most degradation to the environment? 2. In which environmental category would you classify excessive use of materials and energy? 3. Suppose that the toxin releases cause health problems for those who live near the chemical plant. The costs, due to missed work and medical treatments, are estimated at 2,025,000 per year. How would assignment of these costs change the unit cost? Should they be assigned?
Required: If Nelie’s Nursery wishes to earn a before-tax profit of $30,000 on this type of flower, how many flowers must be sold to landscapers?
There are four factories in the city of Gotham that are polluting the waterways. Each firm is currently producing 4 pounds of pollution; Managers will continue to pollute unless the local government intervenes. Managers will prefer to maximize economic profit by avoiding paying any costs to reduce or prevent pollution created by their business. The table below shows the marginal cost of cleaning up each pound of pollution. For example, the Gamma’s cost of cleaning up the third-pound of pollution is $180. Beta’s cost of cleaning up the first pound of pollution is $30. If Alpha cleaned up all four pounds of pollution, the total cost will be $320 (=40+40+80+160) i.e. add up the marginal cost. MARGINAL COST OF CLEANING UP POLLUTION Name of firm Alpha Beta Delta Gamma in $ in $ in $ in $ 1 st pound $40 $30 $80 $20 2 nd pound $40 $60 $90 $60 3 rd pound $80 $120 $100 $180 4 th pound $160…