Holvey Company makes three products in a single facility. Data concerning these products follow: The mixing machines are potentially the constraint in the production facility. A total of 6,300 minutes are available per month on these machines. Direct labor is a variable cost in this company Products A B C Sales price per unit $70 $92.40 $85.90 Direct Materials 34 50.50 56.90 Direct Labor 21.40 24 14.80 Variable Man. Over. 1.20 $ .60 $ .50 Var. Selling cost per unit 1.80 2.30 2.10 Mixing Minutes per unit 1.20 .80 .40 Monthly Demand in Units 2,000 4,000 2,000
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 of the existing mixing machine capacity? Please show all work