Holt Company Makes Three Products in a Single Facility

question 1

Essay

Holt Company makes three products in a single facility. Data concerning these products follow: The mixing machines are potentially the constraint in the production facility. A total of 25,800 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:

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type, such as grains, gold, oil, and natural gas.

American West

A region of the United States that has been defined in various ways, often characterized by its history of westward expansion, frontier life, and significant cultural and geographical diversity.

Cities

Cities are large human settlements that are significant centers of population, culture, commerce, and political activities.

Indian Boarding Houses

Institutions established primarily in the United States during the 19th and early 20th centuries designed to assimilate Native American children into Euro-American culture.