Question
Rebus Company makes three products in a single facility. Data concerning these products follow: Products (A,B,C)...
Rebus Company makes three products in a single facility. Data concerning these products follow:
|
Products (A,B,C) |
|||
|
A |
B |
C |
|
|
Selling price per unit |
$70.00 |
$92.40 |
$85.60 |
|
Direct Materials |
$34.00 |
$50.50 |
$56.90 |
|
Direct Labor |
$21.40 |
$24.00 |
$14.80 |
|
Variable Manufacturing Overhead |
$1.20 |
$0.60 |
$0.50 |
|
Variable selling cost per unit |
$1.80 |
$2.30 |
$2.10 |
|
Mixing minutes per unit |
$1.20 |
0.80 |
0.40 |
|
Monthly demand in units |
2,000 |
4,000 |
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 company.
Required:
a. Compute how many minutes of mixing machine time would be required to satisfy demand for each of the three products.
b. Compute how many units of each product should be produced to maximize net operating income. (Round off to the nearest whole unit.)
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Answer #1
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