The constraint at Vrana Inc. is an expensive milling machine. The three products

Question

The constraint at Vrana Inc. is an expensive milling machine. The three products listed below use this constrained resource.

JH

KW

DF

$ 318.44

$ 219.75

$ 384.60

$ 239.15

$ 122.56

$ 328.25

8.20

6.50

4.80

8,700

10,200

7,200

Prepare a schedule to determine the rank of each of the products, then answer the following questions by selecting the correct answer from the drop-down box.

What is the contribution margin per unit for JH?

What is the contribution margin per unit for KW?

What is the contribution margin per unit for DF?

What is the contribution margin per unit of the constrained resource for JH?

What is the contribution margin per unit of the constrained resource for KW?

What is the contribution margin per unit of constrained resource for DF?

How many hours of machine time is necessary to satisfy the demand for all products?

If there is sufficient time available to satisfy demand for all but the least profitable product, what is the maximum the copmany will pay to acquire one more hour of the constrained resource?

What is the rank of the products, in order of their current profitability?

Using

2,870

$11.74

#1 - KW; #2 - DF; #3 - JH

$79.29

$9.67

$56.35

$14.95

$97.19

$580.17

JH

KW

DF

Selling Price Per Unit

$ 318.44

$ 219.75

$ 384.60

Variable Cost Per Unit

$ 239.15

$ 122.56

$ 328.25

Time on the Milling Machine

8.20

6.50

4.80

Monthly Demand - Units

8,700

10,200

7,200

Explanation / Answer

Solution:

Solution A

Contribution margin per unit of JH = $79.29

Solution B

Contribution margin per unit of KW = $97.19

Solution C

Contribution margin per unit of DF = $56.35

Solution D

Contribution margin per unit of the constrained resource for JH = $9.67

Solution E:

Contribution margin per unit of the constrained resource for KW = $14.95

Solution F:

Contribution margin per unit of constrained resource for DF = $11.74

Solution G:

Machine time is necessary to satisfy the demand for all products:

(8700*8.20) + (10200*6.50) + (7200*4.80) = 172200 minutes = 2870 hours.

Note: I have answered sufficent parts as per chegg policy, kindly post separate questions for remaining parts.

Computation of contribution margin per constrained resources Particulars JH KW DF Selling price per unit $318.44 $219.75 $384.60 Variable cost per unit $239.15 $122.56 $328.25 Contribution margin per unit $79.29 $97.19 $56.35 Time in milling machine 8.20 6.50 4.80 Contribution per time of milling machine $9.67 $14.95 $11.74 Rank 3 1 2

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