Question 10.3 Guerrero Company makes three products in a single facility. These products have the following unit product costs: Products A B C Direct materials $10.90 $15.80 $8.00 Direct labour 12.50 12.60 9.90 Variable manufacturing overhead 2.40 1.20 1.40 Fixed manufacturing overhead 11.60 7.20 7.80 Unit product cost $37.40 $36.80 $27.10 Additional data concerning these products are listed below. Products A B C Mixing minutes per unit 2.00 1.00 0.50 Selling price per unit $55.80 $54.60 $43.10 Variable selling cost per unit $2.10 $1.40 $1.90 Monthly demand in units 2,000 1,000 3,000 The mixing machines are potentially a constraint in the production facility. A total of 5,900 minutes are available per month on these machines.Direct labour is a variable cost in this company. Required: How many minutes of mixing machine time would be required to satisfy demand for all four products? How much of each product should be produced, rounded to the nearest whole unit, to maximize operating income Up to how much should the company be willing to pay, rounded to the nearest whole cent, for one additional minute of mixing machine time if the company has made the best use of the existing mixing machine capacity?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 5PB: Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units...

See similar textbooks

Related questions

Question

Question 10.3

Guerrero Company makes three products in a single facility. These products have the following unit product costs:

	Products
	A	B	C
Direct materials	$10.90	$15.80	$8.00
Direct labour	12.50	12.60	9.90
Variable manufacturing overhead	2.40	1.20	1.40
Fixed manufacturing overhead	11.60	7.20	7.80
Unit product cost	$37.40	$36.80	$27.10

Additional data concerning these products are listed below.

	Products
	A	B	C
Mixing minutes per unit	2.00	1.00	0.50
Selling price per unit	$55.80	$54.60	$43.10
Variable selling cost per unit	$2.10	$1.40	$1.90
Monthly demand in units	2,000	1,000	3,000

The mixing machines are potentially a constraint in the production facility. A total of 5,900 minutes are available per month on these machines.

Direct labour is a variable cost in this company.

Required:

How many minutes of mixing machine time would be required to satisfy demand for all four products?
How much of each product should be produced, rounded to the nearest whole unit, to maximize operating income
Up to how much should the company be willing to pay, rounded to the nearest whole cent, for one additional minute of mixing machine time if the company has made the best use of the existing mixing machine capacity?

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here