Question: Holzmeyer Company makes three products in a single facility. Data concerning these products follow: product A product B product C Selling price per unit $
Holzmeyer Company makes three products in a single facility. Data concerning these products follow:
| product A | product B | product C | |
| Selling price per unit | $ 64.50 | $ 64.80 | $ 63.30 |
| direct materials | $ 20.90 | $ 14.50 | $ 18.30 |
| direct labor | $ 30.80 | $ 33.40 | $ 26.00 |
| variable manufacturing overhead | $ 1.60 | $ 1.90 | $ 2.10 |
| variable selling cost per unit | $ 1.00 | $ 3.40 | $ 1.50 |
| mixing minutes per unit | 3.50 | 3.10 | 3.50 |
| monthly demand in unit | 4000 | 2000 | 4000 |
The mixing machines are potentially the constraint in the production facility. A total of 32,400 minutes are available per month on these machines.
a) How much of each product should be produced to maximize net operating income?
b) Up to how much more is the company 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?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
