Glunn Company Makes Three Products in a Single Facility

question 22

Essay

Glunn Company makes three products in a single facility. These products have the following unit product costs: Additional data concerning these products are listed below. The mixing machines are potentially the constraint in the production facility. A total of 24,200 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? (Round off to the nearest whole unit.)
c. Up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity? (Round off to the nearest whole cent.)

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Definitions:

Radioactive

Referring to materials or elements that emit radiation as a result of the decay of atomic nuclei.

Guaiac Test

A diagnostic screening tool used to detect the presence of occult (hidden) blood in stool, an indicator of various gastrointestinal disorders.

Gastrointestinal Bleeding

The loss of blood occurring within the gastrointestinal tract, which can manifest as vomit or stool appearing black or bloody.

Menstruating

The process of shedding the uterine lining, resulting in bleeding through the vagina, which typically occurs as part of the monthly menstrual cycle in human females.