Question
In: Accounting
8. Holton Company makes three products in a single facility. Data concerning these products follow: Product...
8. Holton Company makes three products in a single facility. Data concerning these products follow:
| Product | ||||||
| A | B | C | ||||
| Selling price per unit | $ | 94.50 | $ | 79.60 | $ | 112.60 |
| Direct materials | $ | 41.20 | $ | 44.40 | $ | 67.70 |
| Direct labor | $ | 29.70 | $ | 14.20 | $ | 16.70 |
| Variable manufacturing overhead | $ | 5.70 | $ | 4.80 | $ | 7.80 |
| Variable selling cost per unit | $ | 7.20 | $ | 3.40 | $ | 4.80 |
| Mixing minutes per unit | 12.80 | 2.50 | 2.50 | |||
| Monthly demand in units | 3,000 | 1,000 | 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?
Solutions
Expert Solution
The answer has been presented to the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.
ekkarill92 answered 1 year agoRelated Solutions
Holton Company makes three products in a single facility. Data concerning these products follow: Product A...
Holton Company makes three products in a single facility. Data
concerning these products follow:
Product
A
B
C
Selling price per
unit
$
90.30
$
77.40
$
139.30
Direct materials
$
39.40
$
43.20
$
83.80
Direct labor
$
28.40
$
13.80
$
21.50
Variable manufacturing
overhead
$
5.50
$
4.60
$
10.00
Variable selling cost per
unit
$
7.70
$
3.30
$
6.10
Mixing minutes per unit
13.70
2.00
2.00
Monthly demand in units
3,000
1,000
2,000
The mixing...
Holton Company makes three products in a single facility. Data concerning these products follow: Product A...
Holton Company makes three products in a single facility. Data
concerning these products follow:
Product
A
B
C
Selling price per unit
$
91.60
$
78.20
$
125.10
Direct materials
$
39.90
$
43.60
$
75.20
Direct labor
$
28.80
$
13.90
$
20.10
Variable manufacturing overhead
$
5.60
$
4.60
$
9.40
Variable selling cost per unit
$
8.70
$
3.30
$
5.80
Mixing minutes per unit
15.40
2.00
2.00
Monthly demand in units
3,000
1,000
2,000
The mixing...
Holton Company makes three products in a single facility. Data concerning these products follow: Product A...
Holton Company makes three products in a single facility. Data
concerning these products follow:
Product
A
B
C
Selling price per unit
$
76.10
$
72.70
$
77.10
Direct materials
$
33.10
$
40.60
$
46.40
Direct labor
$
24.00
$
13.10
$
7.20
Variable manufacturing overhead
$
4.60
$
4.40
$
3.30
Variable selling cost per unit
$
1.60
$
3.20
$
2.00
Mixing minutes per unit
2.80
1.90
2.60
Monthly demand in units
3,000
1,000
2,000
The mixing...
Holton Company makes three products in a single facility. Data concerning these products follow: Product A...
Holton Company makes three products in a single facility. Data
concerning these products follow: Product A B C Selling price per
unit $ 137.10 $ 74.80 $ 167.60 Direct materials $ 59.70 $ 41.70 $
100.70 Direct labor $ 43.00 $ 13.30 $ 29.50 Variable manufacturing
overhead $ 8.20 $ 4.30 $ 13.80 Variable selling cost per unit $
15.20 $ 3.10 $ 8.50 Mixing minutes per unit 26.90 2.00 2.00 Monthly
demand in units 3,000 1,000 2,000 The mixing...
Holton Company makes three products in a single facility. Data concerning these products follow: Product A...
Holton Company makes three products in a single facility. Data
concerning these products follow:
Product
A
B
C
Selling price per unit
$
91.60
$
78.20
$
125.10
Direct materials
$
39.90
$
43.60
$
75.20
Direct labor
$
28.80
$
13.90
$
20.10
Variable manufacturing overhead
$
5.60
$
4.60
$
9.40
Variable selling cost per unit
$
8.70
$
3.30
$
5.80
Mixing minutes per unit
15.40
2.00
2.00
Monthly demand in units
3,000
1,000
2,000
The mixing...
Holvey Company makes three products in a single facility. Data concerning these products follow: Product A...
Holvey Company makes three products in a single facility. Data
concerning these products follow:
Product
A
B
C
Selling price per
unit
$
70.00
$
92.40
$
85.90
Direct
materials
$
34.00
$
50.50
$
56.90
Direct labor
$
21.40
$
24.00
$
14.80
Variable
manufacturing overhead
$
1.20
$
.60
$
.50
Variable selling
cost per unit
$
1.80
$
2.30
$
2.10
Mixing minutes per
unit
1.20
.80
0.40
Monthly demand in
units
2,000
4,000
2,000
The mixing...
Weiss Enterprises makes three products in a single facility. Data concerning these products follow: Product A...
Weiss Enterprises makes three products in a single facility.
Data concerning these products follow:
Product
A
B
C
Selling price per unit
$
90.90
$
73.00
$
82.30
Direct materials
$
39.60
$
40.70
$
49.50
Direct labor
$
28.60
$
13.10
$
9.60
Variable manufacturing overhead
$
5.50
$
4.50
$
4.50
Variable selling cost per unit
$
4.20
$
3.30
$
2.70
Mixing minutes per unit
7.50
1.00
1.00
Monthly demand in units
3,000
1,000
2,000
The mixing...
Holt Company makes three products in a single facility. Data concerning these products follow: Products A...
Holt Company makes three products in a single facility. Data
concerning these products follow:
Products
A
B
C
Selling price per unit
$58
$68
$44
Variable production cost per unit
$20
$29
$17
Variable selling cost per unit
$2
$3
$2
Mixing minutes per unit
4
2
5
Monthly demand in units
3,000
1,000
3,000
The mixing machines are potentially the constraint in the
production facility. A total of 27,000 minutes are available per
month on these machines.
Direct labour...
Holvey Company makes three products in a single facility. Data concerning these products follow: Selling price...
Holvey Company makes three products in a single facility. Data
concerning these
products follow:
Selling price per unit
CM ration
Mixing minute per unit
Monthly demand in units
Product A
$70
15%
1.20
2,000
Product B
$95
20%
0.80
4,000
Product C
$85
%16
0.40
2,000
The mixing machines are potentially the constraint in the
production facility. A total of 6,300 minutes are available per
month on these machines. Direct labor is a variable cost in this...
Glover Company makes three products in a single facility. These products have the following unit product...
Glover Company makes three products in a single facility. These
products have the following unit product costs:
Product
A
B
C
Direct materials
$
35.00
$
51.50
$
57.90
Direct labor
22.40
25.00
15.80
Variable manufacturing overhead
2.20
1.60
1.50
Fixed manufacturing overhead
12.10
7.70
8.30
Unit product cost
$
71.70
$
85.80
$
83.50
Additional data concerning these products are listed below.
Product
A
B
C
Mixing minutes per unit
1.40
0.90
0.50
Selling price per unit
$
80.00...
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