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Chemco imports different grades of fertiliser which it sells in bulk to farmers. All products currently
make a profit. Chemco has now decided to consider refining the fertilisers by further processing, in
order to sell it to individuals for domestic use.
The quantities and associated costs are as follows:
Fertiliser Basic
Medium
grade Premium
Current monthly sales quantity 100 kg 40 kg 60 kg
Current sales price per kg (farmers) $5 $7 $10
After further processing:
Sales price per kg (individual customers) $5.5 $8 $13
Further processing cost per kg $0.60 $0.80 $2If there are no demand restrictions, to which type or types of customers should the fertilizers be sold
Basic Medium Premium
Farmers
Individuals
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