Holton Company makes three products in a single facility. Data concerning these products follow:
Product
A B C
Selling price per unit $ $ $
Direct materials $ $ $
Direct labor $ $ $
Variable manufacturing overhead $ $ $
Variable selling cost per unit $ $ $
Mixing minutes per unit
Monthly demand in units
The mixing machines are potentially the constraint in the production facility. A total of minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Required: 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? Please explain the step by step process