Question

Holton Company makes three products in a single facility. Data concerning these products follow. Product А Selling price per unit Direct materials Direct labor Variable manufacturing overhead Variable selling cost per unit Mixing minutes per unit Monthly demand in units $91.10 $79.30 $89.40 $39.60 $44.20 $53.70 $28.60 $14.20 $11.30 $ 5.50 $ 4.89 $ 5.30 $5.00 $ 3.50 $ 3.20 8.90 2.50 2.50 3,000 1,800 2,000 The mixing machines are potentially the constraint in the production facility. A total of 14,000 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? 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? Complete this question by entering your answers in the tabs below. Required A Required B Required C How many minutes of mixing machine time would be required to satisfy demand for all three products Total minutes required Required A Required B >

if you can please answer A,B&C i will glady give a thumbs up thank you.

Answer 1

Holton Company Requirement a Demand on the mixing machine: 8.9 Mixing minutes per unit Monthly demand in units... Total minutes required Product A Product B Product C 2.5 2.5 1000 2000 26700 2500 5000 Total time required for all products: 34,200 Requirement b Optimal production plan: Product A Product B Product C 91.1 79.3 89.4 Selling price per unit 44.2 14.2 4.8 3.5 Direct materials Direct labor Variable manufacturing overhead Variable selling cost per unit Total variable cost per unit Contribution margin per unit Mixing minutes per unit Contribution margin per minute Rank in terms of profitability Optimal production 39.6 28.6 5.5 5 78.7 12.4 8.9 1.39 53.7 11.3 5.3 3.2 73.5 15.9 2.5 6.36 66.7 12.6 25 5.04 730 1000 2000 Requirement The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $1.39.