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Question:Dweeb Corp. makes three products in a single facility. These products have the following

unit product costs:

                                                                   Product A              Product B                  Product C

Direct material                                               $40.00                        $35.00                        $38.00

Direct labor                                                     21.00                         18.50                         17.50

Variable manufacturing overhead                     5.50                           7.00                         11.00

Fixed manufacturing overhead                        35.00                           36.00                        31.00    

Unit cost                                                     $101.50                        $96.50                       $97.50

 

Additional data concerning these products are listed below:

                                                                   Product A                Product B           Product C

Mixing minutes per unit                                   5.5                              3.5                    5.0

Selling price per unit                                    $135.00                  $122.00                 128.00

Variable selling cost per unit                            $9.50                       $7.00                   $8.75

 Monthly demand in units                               2,400                        4,900                   4,200


The mixing machines are potentially the constraint in the production facility. A total of 47,000 minutes are available per month on these machines.

Direct labor is a variable cost in this company.


1)How many minutes of mixing machine time would be required to satisfy demand for all three products?


2) What is the contribution margin per minute individually for Products A, B, and C?


3) Using only the available 47,000 minutes of machine time, how much of each product should be produced to maximize net operating income? (Round down to the nearest whole units.)


4)Is there unmet demand for product(s)? If so, how much and for which product(s)?


5)Assume there is unmet product demand. How much in total should Dweeb be willing to pay for additional machine time?

Top Answer

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1). Mixing minutes required to satisfy demand of all products.
A
B
C
Total
Mixing minutes per unit
5.50
3.50
5.00
Monthly demand in Units
2,400.00
4,900.00
4,200.00
Total minutes for monthly...

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