Johnson Company makes three products in a single facility. These products have the following unit product costs:

Product

Direct materials: A $35.00 B $51.50 C $57.90

Direct labor: A 22.40 B 25.00 C 15.80

Variable manufacturing overhead: A 2.20 B 1.60 C 1.50

Fixed manufacturing overhead: A12.10 B 7.70 C 8.30

Unit product cost: A $71.70 B $85.80 C $83.50

Additional data concerning these products are listed below

Product

Mixing minutes per unit: A 1.40 B 0.90 C 0.50

Selling price per unit: A $80.00 B $102.40 C $95.90

Variable selling cost per unit: A $2.80 B $3.30 C $3.10

Monthly demand in units: A 3,000 B 4,300 C 2,300

The mixing machines are potentially the constraint in the production facility. A total of 9,120 minutes are available per month on these machines. Direct labor is a variable cost in this company.

A. How many minutes of mixing machine time would be required to satisfy monthly demand for all three products?

B. How much of each product should be produced monthly to maximize net operating income?

C. Assume the company has made the best use of its existing mixing machine capacity according to your answer for b. above. Up to how much should the company be willing to pay for one additional hour of mixing machine time?

D. Assume the company has made the best use of its existing mixing machine capacity according to your answer for b. above. Up to how much should the company be willing to pay for the additional mixing machine time required to satisfy monthly demand for all three products?