Jumonville Company produces a single product. The cost of producing and selling

Jumonville Company
produces a single product. The cost of producing and selling a single unit of
this product at the company’s normal activity level of 70,000 units per month
is as follows:

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The normal selling price of the product is $56.70 per unit.
An order has been received from an overseas customer for 2,000 units to be
delivered this month at a special discounted price. This order would have no
effect on the company’s normal sales and would not change the total amount of
the company’s fixed costs. The variable selling and administrative expense
would be $0.70 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.

Required:
a. Suppose there is ample idle capacity to produce the units required by
the overseas customer and the special discounted price on the special order is
$51.20 per unit. By how much would this special order increase (decrease) the
company’s net operating income for the month?
b. Suppose the company is already operating at capacity when the special
order is received from the overseas customer. What would be the opportunity
cost of each unit delivered to the overseas customer?
c. Suppose there is not enough idle capacity to produce all of the units
for the overseas customer and accepting the special order would require cutting
back on production of 700 units for regular customers. What would be the
minimum acceptable price per unit for the special order?

Question 2

Glunn Company makes three products in a single facility.
These products have the following unit product costs:
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Additional data concerning these products are listed below.
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The mixing machines are potentially the constraint in the production facility.
A total of 24,200 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? (Round off to the nearest whole unit.)
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? (Round off to the nearest whole
cent.)