The constraint at Rauchwerger Corporation is time on a particular machine. The c

Question

The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: WX KD FS Selling price per unit $192.00 $542.66 $222.84 Variable cost per unit $158.72 $420.54 $167.76 Minutes on the constraint3.208.60 3.60 Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your intermediate calculations to 2 decimal places.) Multiple Choice $33.28 per unit

Explanation / Answer

The Answer is $10.40 per minute.

The explanation is as follows:

WX KD FS Selling Price 192 542.66 222.84 Less: Variable cost 158.72 420.54 167.76 Contribution margin per unit 33.28 122.12 55.08 Minutes on Constraint 3.2 8.6 3.6 Contribution margin per minute 10.4 14.2 15.3 Ranking III II I Therefore, The company is willing to pay $ 10.40 per minute, the contribution per minute given by least profitable product.

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