I need help with part B and C. Thank you :) Glocker Company makes three products
ID: 2592952 • Letter: I
Question
I need help with part B and C. Thank you :)
Glocker Company makes three products in a single facility. These products have the following unit product costs:
Glocker Company makes three products in a single facility. These products have the following unit product costs Product S 33.50 50.00 56.40 S 20.90 23.50 14.30 Variable manufacturing overhead S 1.90 $ 1.30 S 0.20 9.00 Direct materials Direct labor Fixed manufacturing overhead 12.80 8.40 Unit product cost $69.10 $83.20 $79.90 Additional data concerning these products are listed below. Mixing minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units 1.90 0.50 0.20 S 65.00 87.40 80.90 S 1.30 1.80 1.60 2,000 2,700 4,000 The mixing machines are potentially the constraint in the production facility. A total of 7,430 minutes are available per month on these machines. Direct labor is a variable cost in this companyExplanation / Answer
Product
A
B
C
Selling price per unit
65
87.40
80.90
Direct materials
33.50
50
56.40
Direct labor
20.90
23.50
14.30
Variable manufacturing overhead
1.90
1.30
0.20
Variable selling cost per unit
1.30
1.80
1.60
Total variable cost per unit
57.60
76.60
72.50
Contribution per unit
7.40
10.80
8.40
Mixings minutes per unit
1.90
0.50
0.20
Contribution per mixing minutes
7.4/1.90 = 3.894
10.8/0.5 = 21.6
8.4/0.20 = 42
Rank
3
2
1
b)
Firstly, we need to product C as contribution per mixing minutes is the highest in Product C.
Monthly demand of Product C = 2000 units
Mixing minutes required to satisfy produce 2000 units = 2000*0.20 = 400
Remaining mixing minutes = 7430 – 400 = 7030 minutes
Secondly, we need to produce Product B.
Monthly demand of Product C = 4000 units
Mixing minutes required to satisfy produce 4000 units = 4000*0.5 = 2000
Thirdly, we need to produce Product A.
Remaining mixing minutes = 7430 – 400 – 2000 = 5030
Mixing minutes required per unit of Product A = 1.90
Number of units produced of Product A = 5030/1.90 = 2647.36 i.e. 2648 units
A
B
C
Optimal Production (units)
2648
4000
2000
c)
Company will be willing to pay maximum = $42 *60 = 2520
Product
A
B
C
Selling price per unit
65
87.40
80.90
Direct materials
33.50
50
56.40
Direct labor
20.90
23.50
14.30
Variable manufacturing overhead
1.90
1.30
0.20
Variable selling cost per unit
1.30
1.80
1.60
Total variable cost per unit
57.60
76.60
72.50
Contribution per unit
7.40
10.80
8.40
Mixings minutes per unit
1.90
0.50
0.20
Contribution per mixing minutes
7.4/1.90 = 3.894
10.8/0.5 = 21.6
8.4/0.20 = 42
Rank
3
2
1
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