Brown Corporation makes four products in a single facility. These products have
ID: 2416515 • Letter: B
Question
Brown Corporation makes four products in a single facility. These products have the following unit product costs:
Products
27.90
14.80
14.90
16.90
$66.70
$62.10
$52.10
$47.80
Additional data concerning these products are listed below.
Products
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?
Brown Corporation makes four products in a single facility. These products have the following unit product costs:
Explanation / Answer
Products
A
B
C
D
Selling price per unit
$80.70
$73.10
$69.90
$64.60
Variable selling cost per unit
$3.00
$3.50
$3.20
$3.90
CONTRIBUTION
77.7
69.6
66.7
60.7
Grinding minutes per unit
2.20
1.30
0.90
0.50
Grinding machine contribution per minute
170.94
90.48
60.03
30.35
Product A makes the MOST profitable use of the grinding machines
Products
A
B
C
D
Selling price per unit
$80.70
$73.10
$69.90
$64.60
Variable selling cost per unit
$3.00
$3.50
$3.20
$3.90
CONTRIBUTION
77.7
69.6
66.7
60.7
Grinding minutes per unit
2.20
1.30
0.90
0.50
Grinding machine contribution per minute
170.94
90.48
60.03
30.35
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