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:

Percentile Points

Values that divide a set of observations into 100 equal parts, often used to interpret scores in tests.

Distribution

The spread of values within a dataset, representing how often each value occurs.

T Scores

Standardized scores with a mean of 50 and a standard deviation of 10, used to compare an individual's result to a norm group.

Standard Scores

Scores that are expressed as the number of standard deviations above or below the mean of the distribution.