Question
Holvey Company makes three products in a single facility. Data concerning these products follow: Selling price per unit CM ration Mixing minute per unit Monthly
Holvey Company makes three products in a single facility. Data concerning these
products follow:
Selling price per unit CM ration
Mixing minute per unit Monthly demand in units | Product A $70 15%
1.20 2,000 | Product B $95 20%
0.80 4,000 | Product C $85 %16
0.40 2,000 |
The mixing machines are potentially the constraint in the production facility. A total of 6,300 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? (2marks) b. How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit). (3marks)
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