Question - Glocker Company makes three products in a single facility. These products have the following unit product costs:
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Product
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|
|
A
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B
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C
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Direct materials
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$34.20
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$50.70
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$57.10
|
|
Direct labor
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$21.60
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$24.20
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$15.00
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|
Variable manufacturing overhead
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$1.40
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$0.80
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$0.70
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|
Fixed manufacturing overhead
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11.30
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6.90
|
7.50
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Unit product cost
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$68.50
|
$82.60
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$80.30
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Additional data cementing these products are listed below.
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Mixing minutes per unit
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1.40
|
1.00
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0.20
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Selling price per unit
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$72.00
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$94.40
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$87.90
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|
Variable selling cost per unit
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$2.00
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$2.50
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$2.30
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|
Monthly demand in units
|
2,200
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4,200
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2,200
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The mixing machines are potentials the constraint in the production facility. A total of 1020 minutes are available per month on these machines. Direct labor is a 1Iran'ahle cost in this company.
Required:
a. How many minutes of mixing machine time would be required to satisfy demand for all three products?
b. How much of each product should be produced to maximize net operating income?
c. Up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use at the existing mixing machine capacity?