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Glunn Company makes three products in a single facility. These products have the following unit product costs: A B C Direct Materials 12.80 9.30 4.70$
Glunn Company makes three products in a single facility. These products have the following unit product costs: A B C Direct Materials 12.80 9.30 4.70$ Direct Labor 14.10 14.90 0.90 Variable manufacturing overhead 1.2 Fixed manufacturing overhead 18.50 Unit product cost 46.60 10.00$ 0.50$ 23.70$ 38.90$ 17.20 42.30 Additional data concerning these products are listed below. A B C 3.70 3.40 3.90 Mixing minutes per units Selling price per unit 59.20 60.10 55.30$ 2.70 3 70$ A B 3.70 3.40 3.90 59.20 60.10 Mixing minutes per units Selling price per unit Variable selling cost per unit Monthly demand in units 55.30$ 3.70$ 2.90 2.70 2000 4000 2000 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: How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.) Part B: ration has received a request for a special order of 9,000 units of product Z74 for $46.50 each. The to ho modified slightly for the custo Part B: Holtrop Corporation has received a request for a special order of 9,000 units of product Z74 for $46.50 each. The normal selling price of this product is $51.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows: Direct materials 17.30$ Direct labor 6.60 3.80 Variable manufacturing overhead Fixed manufacturing overhead 6.70 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product Z74 that would increase the variable costs by $6.20 per unit and that would require a one-time investment of $46,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Determine the effect on the company's total net operating income of accepting the special order. Show your work
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