Your Company makes three products in a single facility. These products have the
ID: 2455611 • Letter: Y
Question
Your Company makes three products in a single facility. These products have the following unit product costs:
Product A Product B Product C
Direct materials.....................................$24.90 $25.70 $26.60
Direct labor..............................................13.30 17.10 15.70
Variable manufacturing overhead..... 2.50 2.80 3.10
Fixed manufacturing overhead........... 19.80 27.70 21.00
Unit product cost ....................................$60.50 $73.30 $66.40
Additional data concerning these products are listed below:
Product A Product B Product C
Mixing minutes per unit............. 2.50 1.70 1.60
Selling price per unit $71.50 $87.90 $83.00
Variable selling cost per unit $2.30 $1.90 $3.80
Monthly demand in units 1,000 3,000 3,000
The mixing machines are potentially the constraint in the production facility. A total of 10,800 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Required:
a. How many minutes of mixing machine time would be required to satisfy demand for all four products?
b. How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)
Explanation / Answer
Your Company makes three products in a single facility. These products have the
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