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 Product Direct materials Direct labor Variable manufacturing 33.90 50.40 56.80 $21.30 23.90 S14.70 S 2.30 1.70 0.40 overheacd Fixed manufacturing overhead 12.40 8.00 8.60 Unit product cost $69.90 $84.00 $80.50 Additional data concerning these products are listed belovw Mixing minutes per unit Selling price per unit Variable selling cost per unit1.70 Monthly demand in units 1.10 0.70 0.20 69.00 91.40 84.90 2.20 4,400 2.00 2,400 3,100 The mixing machines are potentially the constraint in the production facility. A total of 6,870 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 three products? Total minutes required

Explanation / Answer

A

B

C

Mixing minutes per unit

1.10

.70

.20

Monthly demand in units

3100

4400

2400

Total minutes required

3,410

3,080

480

Total time required for all products = 6,970

A

B

C

Selling price

69

91.40

84.90

Less: Variable cost

Direct materials

33.90

50.40

56.80

Direct labor

21.30

23.90

14.70

Variable manufacturing overhead

2.30

1.70

     .40

Variable selling cost per unit

1.70

2.20

2.00

Total variable cost

59.20

78.20

73.90

Contribution per unit

9.80

13.20

11.00

Mixing minutes per unit

1.10

    .70

     .20

Contribution per minute

$8.91

$18.86

$55

Rank

3

2

1

Optimal production

3009 units

4400 units

2,400

C) the company should be willing to pay up to the contribution margin per unit for the marginal job which is $8.91

1. Demand on the mixing machine

A

B

C

Mixing minutes per unit

1.10

.70

.20

Monthly demand in units

3100

4400

2400

Total minutes required

3,410

3,080

480

Total time required for all products = 6,970

1. Optimal production plan:

A

B

C

Selling price

69

91.40

84.90

Less: Variable cost

Direct materials

33.90

50.40

56.80

Direct labor

21.30

23.90

14.70

Variable manufacturing overhead

2.30

1.70

     .40

Variable selling cost per unit

1.70

2.20

2.00

Total variable cost

59.20

78.20

73.90

Contribution per unit

9.80

13.20

11.00

Mixing minutes per unit

1.10

    .70

     .20

Contribution per minute

$8.91

$18.86

$55

Rank

3

2

1

Optimal production

3009 units

4400 units

2,400

C) the company should be willing to pay up to the contribution margin per unit for the marginal job which is $8.91

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