Carolina Chemicals (CC) produces KleenBright, a solvent that is used in many industrial applications. Several customers have suggested that KleenBright be processed to produce a more aggressive solvent. CC has considered this suggestion and developed two new products: KleenMax and KleenUltra. CC would produce KleenMax by processing KleenBright further and KleenUltra would be produced by processing KleenMax further. The marketing manager and plant controller have prepared the following price, demand, and cost estimates. Plant capacity at CC is determined by the capacity of the blending machines, which is 10,000 hours.

Required 

(a) What production level of the three products will result in the highest contribution margin? 

(b) A customer is willing to sign a contract to purchase as many kiloliters of KleenUltra that CC can provide in the upcoming period. If accepting this offer will have no effect on the sales of any product beyond this period, what is the minimum price that CC should be willing to accept for this special order?  

Price per kiloliter (KL).. Maximum demand (KL) Manufacturing costs Direct material Kleenbright... Direct labor... Manufacturing overhead Variable... Fixed... Total manufacturing cost Selling cost Variable Fixed.... Total selling cost. Total product cost... Total blending machine hours per KL..... KLEENBRIGHT $1,000 1,000 $ 500 0 100 $ 20 100 $ 720 $ 100 50 $ 150 $ 870 SALES INFORMATION 5 KLEENMAX $1,500 700 COST PER KILOLITER $ 300 720 30 $ 15 80 $1,145 $ 150 60 $ 210 $1,355 KLEEN ULTRA $2,000 400 8 $ 400 1,145 10 $ 10 60 $1,625 $ 200 70 $ 270 $1,895 10