LO1,2,3,4 3-71 Produrt miT drcision Aramis Aromatics Comppany peoduces and sells its product AA100 to wrll-known cosmetics companies bor 5940 per on. The marketing manager is 116 Capter3 singCin Decision Making coesidering the pessibility o refi ning AA100 further into liner perlumes before selling them to the cosmetis eompanies. ProductAA101 is expected to comand a price of $1,500 per to and AA102 a price ol $1,700 per ton The maximum expected demand is 400 tons ot AA101 and 100 tons or AA102. The anmal plant capacity ol 2,400 hours is fully utilkeed at present to manuacture 600 toeis o AA100. The marketing manager peoposed that Aramis sell 300 tons ofAA100, 100 tons ol AA101, and 75 tons of AA102 in the next year. It equires 4 hours ol capacity to nake 1 toeo AA100, 2 hours to eedine 1 bon od AA100 further into AAiO, and 4 hours to eeline 1 ton ed AA100 into AA102 instead. The plant accountant has peepared the tollowing inlormation foe the thee products: AANI AAI0 Lhrect material Chmicals and tragran AA1O buect ubor Manulaturing overad Fised 51.320 S510 llnts ld 10 Maimam drnand 100 one Required ai Debermine the contribution margin for each product b) Determine the peoduction evels for the three peoducts under the prsent constraint on plan capacity thal will maimize tolal contribution lcl Suppose a customet, Cosmas Cosmetics Company, is very interesbed in the new product 101. It his defered to signkng-term contract for 40 tons od AA101. It is also willing to pay a higher palor i the entine plant capacity is dedscated to the peoduction of AA101. What is the price for AA101 at which Aramis is indillerent between its current production ol AA100 and dedicating its entire capacity to the peoduction ol AA10l for Cosmos? id) Suppose, instead, that the price ol AA101 is $1,500 per ton and that the capacity can be increased temporarily by 600 hours the plant is operated overtime. Overtime premium payments to workers and supervisors will increase direct labor and variable manufacturing overhead costs by 0% fot all peoducts. All other costs will fernain unchanged. Is it worthwhile operating the plant overtime? lf the plant is operated overtime foe 600 heours what are the optimal production levels foe the thrve products? LO1,2,3,4 3-71 Produrt miT drcision Aramis Aromatics Comppany peoduces and sells its product AA100 to wrll-known cosmetics companies bor 5940 per on. The marketing manager is 116 Capter3 singCin Decision Making coesidering the pessibility o refi ning AA100 further into liner perlumes before selling them to the cosmetis eompanies. ProductAA101 is expected to comand a price of $1,500 per to and AA102 a price ol $1,700 per ton The maximum expected demand is 400 tons ot AA101 and 100 tons or AA102. The anmal plant capacity ol 2,400 hours is fully utilkeed at present to manuacture 600 toeis o AA100. The marketing manager peoposed that Aramis sell 300 tons ofAA100, 100 tons ol AA101, and 75 tons of AA102 in the next year. It equires 4 hours ol capacity to nake 1 toeo AA100, 2 hours to eedine 1 bon od AA100 further into AAiO, and 4 hours to eeline 1 ton ed AA100 into AA102 instead. The plant accountant has peepared the tollowing inlormation foe the thee products: AANI AAI0 Lhrect material Chmicals and tragran AA1O buect ubor Manulaturing overad Fised 51.320 S510 llnts ld 10 Maimam drnand 100 one Required ai Debermine the contribution margin for each product b) Determine the peoduction evels for the three peoducts under the prsent constraint on plan capacity thal will maimize tolal contribution lcl Suppose a customet, Cosmas Cosmetics Company, is very interesbed in the new product 101. It his defered to signkng-term contract for 40 tons od AA101. It is also willing to pay a higher palor i the entine plant capacity is dedscated to the peoduction of AA101. What is the price for AA101 at which Aramis is indillerent between its current production ol AA100 and dedicating its entire capacity to the peoduction ol AA10l for Cosmos? id) Suppose, instead, that the price ol AA101 is $1,500 per ton and that the capacity can be increased temporarily by 600 hours the plant is operated overtime. Overtime premium payments to workers and supervisors will increase direct labor and variable manufacturing overhead costs by 0% fot all peoducts. All other costs will fernain unchanged. Is it worthwhile operating the plant overtime? lf the plant is operated overtime foe 600 heours what are the optimal production levels foe the thrve products