Asked by Megan Quinn on May 05, 2024
Verified
Glover Company makes three products in a single facility. These products have the following unit product costs:
Additional data concerning these products are listed below.
The mixing machines are potentially the constraint in the production facility. A total of 10,900 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?b. How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)c. 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 off to the nearest whole cent.)
Mixing Machines
Equipment used in various industries for blending or combining ingredients or materials into a homogeneous or specific mixture.
Demand
The desire of purchasers, consumers, or clients for a particular good or service, coupled with the capacity to purchase it.
Variable Cost
Expenses that vary directly with the level of production or sales, including costs for raw materials and direct labor.
- Understand the basics of product cost calculation including direct materials, direct labor, and overhead costs.
- Grasp the concepts of constraint analysis and bottleneck identification in production facilities.
Verified Answer
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A'Niyah DawsonMay 07, 2024
Final Answer :
a.Demand on the mixing machine:
Total time required for all products:12,300b.Optimal production plan:
c.The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $10.30.
Total time required for all products:12,300b.Optimal production plan: c.The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $10.30.
Learning Objectives
- Understand the basics of product cost calculation including direct materials, direct labor, and overhead costs.
- Grasp the concepts of constraint analysis and bottleneck identification in production facilities.