I figured out part A but I can\'t get part B D The constraint at Dreyfus Ine. is

Question

I figured out part A but I can't get part B

D The constraint at Dreyfus Ine. is an expensive milling machine. The three products listed below use this constrained resource. VY QX $ 78.65 421.59 145.92 S 62.40 331.20 113.28 AM Selling price per unit Variable cost per unit Time on the constraint (minutes) 1.30 6.90 2.40 Cm 1 ?o 39 32.ey Required: [15 points] 1 3 a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. b. Assume that sufficient constraint time is available 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?

Explanation / Answer

Part B

VY QX AM Selling price per unit $   78.65 $ 421.59 $ 145.92 Less : Variable cost per unit $   62.40 $ 331.20 $ 113.28 Contribution margin per unit $   16.25 $   90.39 $   32.64 Amount of the constrained resource required to produce one unit 1.3 6.9 2.4 Contribution margin per unit of the constrained resource $   12.50 $   13.10 $   13.60 Ranking 3 2 1 *The company should be willing to pay up to the contribution margin per minute , which is $12.50 per minute for VY.

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