Holton company makes three products in a single facility. data concerning these products follow:
product a b c
selling price per unit $ 137.10 $ 74.80 $ 167.60
direct materials $ 59.70 $ 41.70 $ 100.70
direct labor $ 43.00 $ 13.30 $ 29.50
variable manufacturing overhead $ 8.20 $ 4.30 $ 13.80
variable selling cost per unit $ 15.20 $ 3.10 $ 8.50
mixing minutes per unit 26.90 2.00 2.00
monthly demand in units 3,000 1,000 2,000
the mixing machines are potentially the constraint in the production facility. a total of 14,000 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? b. how much of each product should be produced to maximize net operating income? c. up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity?

86,700 minutes

Explanation:

a.  Demand on the mixing machine:

Minutes required to produce 3000 units of A (3000 x 26.9) 80700  

Minutes required to produce 1000 units of B (1000 x 2) 2000  

Minutes required to produce 2000 units of C (2000 x 2) 4000  

Total minutes   =    86,700 minutes

Therefore, in order to satisfy the demand for all of the products they would need 86,700 minutes of mixing machine time,

but they only have 14,000 minutes available for each month.

This means that they cannot satisfy the demand with the number of minutes that they have available.

b.Optimal production plan:

                         Product AProduct BProduct C  

Selling price per unit          $ 137.10     $ 74.80$ 167.60  

Direct materials    $ 59.70       $ 41.70  $ 100.70  

Direct labor      $ 43.00       $ 13.30  $ 29.50

Variable manufacturing overhead$ 8.20       $ 4.30$ 13.80

Variable selling cost per unit  $ 15.20       $ 3.10  $ 8.50

Total variable cost per unit        $ 126.10    $ 62.40$ 152.50

Contribution margin per unit  $ 11.00  $ 12.40  $ 15.10

Mixing minutes per unit          26.902.00  2.00

Contribution margin per minute  $0.41$6.20  $7.55

Rank in terms of profitability          3  2          1

Optimal production          223  1,000  2,000

c. The company should be willing to pay $0.41 for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity for Product A.  

For Product B the company should be willing to pay $6.20, and $7.55 for Product C.

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.