Bruce Corporation makes four products in a single facility. These products have

Question

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

Additional data concerning these products are listed below.

The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

Which product makes the MOST profitable use of the grinding machines? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-09-13

Multiple Choice

Product A

Product B

Product D

Product C

Products A B C D Direct materials $ 16.90 $ 20.80 $ 13.80 $ 16.50 Direct labor 18.90 22.30 16.70 10.70 Variable manufacturing overhead 5.70 6.90 9.40 6.40 Fixed manufacturing overhead 28.80 15.70 15.80 17.80 Unit product cost 70.30 65.70 55.70 51.40

Explanation / Answer

A B C D Selling price per unit 85.2 77.6 74.4 69.1 less:Variable cost Direct materials 16.9 20.8 13.8 16.5 direct labor 18.9 22.3 16.7 10.7 variable manufacturing overhead 5.7 6.9 9.4 6.4 variable selling cost per unit 2.65 3.35 4.1 4.8 total variable cost 44.15 53.35 44 38.4 Contribution margin 41.05 24.25 30.4 30.7 grinding minutes per unit 2.1 1.15 0.7 1 contribution margin per minute 19.55 21.09 43.43 30.70 Rank 4 3 1 2 product C makes the most profitable use

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