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) A B C Mixing minutes per unit 1.1 0.7 0.2 Monthly demand in units 3100 4400 2400 Total mixing minutes required 3410 3080 480 Total minutes required 6970 b) A B C Total Selling price per unit 69 91.4 84.9 less Direct materials 33.9 50.4 56.8 Direct labor 21.3 23.9 14.7 variable manufacturing overhead 2.3 1.7 0.4 variable selling cost 1.7 2.2 2 Total variable cost 59.2 78.2 73.9 Contribution per unit 9.8 13.2 11 Mixing minutes per unit 1.1 0.7 0.2 Contribution per mixing minutes 8.91 18.86 55 Monthly demand in units 3100 4400 2400 Maximum contribution per mixing minutes in from Product C , Hence 1st product C should be produced : Product Units Mixing minutes per unit Total minutes required C 2400 0.2 480 B 4400 0.7 3080 Total minutes available 6870 Balance minutes available 3310 These are to be used in producing Product A A 3009 1.1 3310 c) The maximum amount that the company will be willing to pay for additional mixing minute will be the contribution per mixing minute for Product A is $ 8.91

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