Glocker Company makes three products in a single facility Th

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

Product

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.

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 whole number.)

      

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.)

      

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

Solution

Answer a. Mach. Minutes Reqd. Per Unit Demand in Units Total Mach. Minutes Required Product A                      1.10                  3,100                     3,410 Product B                      0.70                  4,400                     3,080 Product C                      0.20                  2,400                         480 Total Direct Labor Hours Required                     6,970 Answer b. Product A Product B Product C Selling Price per Units                   69.00                  91.40                     84.90 Variable Costs Per Unit: Direct materials                   33.90                  50.40                     56.80 Direct Labor                   21.30                  23.90                     14.70 Variable MOH                      2.30                    1.70                       0.40 Variable Selling Cost                      1.70                    2.20                       2.00 Total Variable Cost                   59.20                  78.20                     73.90 Contribution Margin                      9.80                  13.20                     11.00 Mixing Minutes per Unit                      1.10                    0.70                       0.20 Contribution Margin per Direct Labor Hour                      8.91                  18.86                     55.00 Ranking III II I Calculation of No of Units Produced by available Machine Minutes: Quantity Mach. Minutes per Unit Total Machine Minutes Balance of Mach. Minutes Total Machine Minutes available                  6,870 Product C Produced                   2,400                    0.20                   480.00            6,390.00 Product B Produced                   4,400                    0.70               3,080.00            3,310.00 Product A Produced                   3,009                    1.10               3,309.90                    0.10 Additional Machine Minutes Required For Product A - (91 Units X 1.10 DLH) - 0.10                 100.00 Calculation of Maximum Price to be Paid for 100 Minutes = Contribution Margin on Sale of 91 Units of Product A Contribution on Sale of 91 Units - Product A - $9.80 X 91 Units                 891.80 Maximum Cost per Hour - $891.80 X 60/100                 535.08