PRODUCT MIX DECISION ELEMENTAL HERO CORP. makes three products in a single facility. Data concerning these products follow: 8. Product A P64.50 P20.90 P30.80 Product C P63.30 Product B Selling price per unit Direct materials Direct labor P64.80 P14.50 P33.40 P18.30 P26.00 P2.10 Variable manufacturing overhead Variable selling cost per unit Mixing minutes per unit Monthly demand in units The mixing machines are potentially the constraint in the production facility. A total of 32,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. REQUIREMENTS: (a) P1.60 P1.90 P1.00 3.50 4,000 P3.40 3.10 2,000 P1.50 3.50 4,000 How many minutes of mixing machine time would be required to satisfy demand for all products? (b) Which orders would you advise the company to accept first, second and third? (c) How many units of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)

PRODUCT MIX DECISION ELEMENTAL HERO CORP. makes three products in a single facility. Data concerning these products follow: 8. Product A P64.50 P20.90 P30.80 Product C P63.30 Product B Selling price per unit Direct materials Direct labor P64.80 P14.50 P33.40 P18.30 P26.00 P2.10 Variable manufacturing overhead Variable selling cost per unit Mixing minutes per unit Monthly demand in units The mixing machines are potentially the constraint in the production facility. A total of 32,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. REQUIREMENTS: (a) P1.60 P1.90 P1.00 3.50 4,000 P3.40 3.10 2,000 P1.50 3.50 4,000 How many minutes of mixing machine time would be required to satisfy demand for all products? (b) Which orders would you advise the company to accept first, second and third? (c) How many units of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company produces the following three products in a single manufacturing plant. Product One Two Three Selling price per unit Direct materials $94.50 $79.60 $112.60 $41.20 $44.40 $ 67.7e $29.70 $14.20 $ 16.7e $ 5.70 $ 4.80 $ 7.8e $ 7.20 $ 3.40 $ Direct labor Variable manufacturing overhead Variable selling cost per unit Mixing minutes per unit Monthly demand in units 4.80 12.80 2.50 2.50 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. If the company has made the best use of the existing mixing machine capacity, what is the maximum amount they should be willing to pay for one additional hour of mixing machine time? Complete this…
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