Glocker Company makes three products in a single facility. These products have t

Question

Glocker Company makes three products in a single facility. These products have the following unit product costs:

The mixing machines are potentially the constraint in the production facility. A total of 6,790 minutes are available per month on these machines. Direct labor is a variable cost in this company.

How many minutes of mixing machine time would be required to satisfy demand for all three products?

How much of each product should be produced to maximize net operating income? (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)

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? (Round your answer to 2 decimal places.)

The mixing machines are potentially the constraint in the production facility. A total of 6,790 minutes are available per month on these machines. Direct labor is a variable cost in this company.

Explanation / Answer

A B C Total Demand 2100 3400 1400 Mixing Minute per unit 1.3 1.1 0.3 Total Mixing Minutes 2730 3740 420 6890 Total Minutes Required 6890 Minutes A B C Selling Price per unit 59 81.4 74.9 Variable Costs Direct Material 32.9 49.4 55.8 Direct Labor 20.3 22.9 13.7 Variable Overhead 1.3 0.7 0.8 Variable Selling Cost 0.7 1.2 2.2 Total Variable Cost 55.2 74.2 72.5 Contribution Per Unit 3.8 7.2 2.4 Minutes per unit 1.3 1.1 0.3 Contribution per minute 2.92 6.54 8 Ranking III II I Product Units Minutes C 1400 420 B 3400 3740 A 2013 2630 6790

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