Holt Company Makes Three Products in a Single Facility The Mixing Machines Are Potentially a Constraint in the Production

question 53

Essay

Holt Company makes three products in a single facility.Data concerning these products follow:
$\begin{array}{|l|r|r|r|}\hline &&{\text { Products }} \\\hline & \text { A } & \text { B } & \text { C } \\\hline \text { Selling price per unit } & \$ 67.90 & \$ 57.70 & \$ 43.90 \\\hline \text { Direct materials } & \$ 12.10 & \$ 10.30 & \$ 8.60 \\\hline \text { Direct labour } & \$ 14.10 & \$ 8.00 & \$ 6.80 \\\hline \text { Variable manufacturing overhead } & \$ 2.60 & \$ 2.20 & \$ 1.80 \\\hline \text { Variable selling cost per unit } & \$ 2.50 & \$ 2.20 & \$ 2.50 \\\hline \text { Mixing minutes per unit } & 2.70 & 3.30& 4.70 \\\hline \text { Monthly demand in units } & 1,000& 3,000 & 3,000 \\\hline\end{array}$
The mixing machines are potentially a constraint in the production facility.A total of 25,800 minutes are available per month on these machines.
Direct labour is a variable cost in this company.
Required:
a)How many minutes of mixing machine time would be required to satisfy demand for all four products?
b)How much of each product should be produced,rounded to the nearest whole unit,to maximize operating income?
c)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?

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Definitions:

Monroe Doctrine

A U.S. foreign policy principle declared in 1823, stating opposition to European colonialism in the Americas and restricting future colonization in the Western Hemisphere.

European Colonization

The process by which European powers occupied and ruled over regions across the world, often involving the exploitation and subjugation of indigenous populations, from the late 15th century onwards.

Americas Off-Limits

Pertains to policies or historical periods when certain areas of the Americas were restricted or closed off to specific groups, often for political or colonial reasons.

Monroe Doctrine

A principle of US foreign policy, enunciated by President Monroe in 1823, stating opposition to European colonization in the Americas and non-interference in European affairs.