Question
Gluth Company makes three paint products in a single facility. These products are produced and sold in 5 gallon units. Each has the following unit
Gluth Company makes three paint products in a single facility. These products are produced and sold in 5 gallon units. Each has the following unit product costs: Products A B C Direct materials ......................................... $22.50 $22.40 $29.20 Direct labor ................................................ 13.60 11.40 12.50 Variable manufacturing overhead ............. 3.00 3.40 4.50 Total variable unit product cost ................. $39.10 $37.20 $46.20 Additional data concerning these products are listed below. Products A B C Mixing minutes per unit.............................. 3.30 1.70 1.80 Selling price per unit ................................... $84.70 $76.10 $87.50 Variable selling cost per unit ...................... $1.80 $2.40 $2.90 Monthly demand in units ............................ 4,000 2,000 4,000 Mixing machine time is limited in the production facility. A total of 21,000 minutes are available per month on these machines. Direct labor is a variable cost in this company. Fixed manufacturing overhead is $155,000 and fixed selling & administrative expenses are $62,000 per month. Question: With its existing facilities, what is the maximum operating income Gluth can earn each month?
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