Situation 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. Required:

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

b. Keeping in mind that the goal of the company is to maximize total operating income; which of the above products is most, second most and least profitable? How much of each product should be produced each month to maximize net operating income? (Round down to the nearest whole unit). Calculate total monthly operating income under your proposed production allocation.

c. A local company has additional mixing machine time available and is willing to rent time on one of its machines so that Gluth can satisfy customer demand for all products. The rental charge will cover all product related costs except direct materials; which must be provided by Gluth. Assuming Gluth follows your proposed production allocation in part b above, what is the maximum amount they should be willing to pay for one additional hour of mixing machine time so as to not sell product at a loss? (Round off to the nearest whole cent).