Question

Glocker Company makes three products in a single facility. These products have the following unit product costs: 3 Product B 5 Direct Materials $ 10.90 $ 15.80 $ 12.60 6 Direct Labor 18.50 12.60 9 .75 7 Variable Manufacturing Overhead 2.40 1.20 1.80 8 Fixed Manufacturing Overhead 11.607.209.60 9 Unit product cost $ 43.40 $ 36.80 $ 33.75 10 11 12 Additional information about the products: Product 14 15 Mixing minutes per unit 2.00 0.50 1.00 16 Selling price per unit 72.20 44.40 17 Variable selling cost per unit 2.10 1.40 1.90 18 Monthly demand in units 1,800 1,600 2,800 19 А 46.80 20 21 The mixing machines are potentially the constraint in the production facility. 22 A total of 5,500 minutes are available per month on these machines. 23

Answer 1

	A	B	C
Mixing Minutes per unit	2	0.5	1
Monthly Demand	1,800	1,600	2,800
Minutes Required	3,600	800	2,800
i.e. 7,200 minutes
b.Products should be produced in the order of contribution margin per mixing minute
	A	B	C
Selling Price per unit	72.2	46.8	44.4
Direct material	10.9	15.8	12.6
Direct labor	18.5	12.6	9.75
Variable manufacturing overhead	2.4	1.2	1.8
Variable selling cost	2.1	1.4	1.9
Contribution Margin per unit	38.3	15.8	18.35
Mixing Minutes per unit	2	0.5	1
CM per minute	19.15	31.6	18.35
Production Schedule
Product	Units	Minutes per unit	Total Minutes
A	1800	2	3600
B	1600	0.5	800
C	1100	1	1100
		Total	5500
3.Maximum amount paid = contriubution margin per minute
=$18.35 per minute since additional time will be used to produce C