A.)

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

	Products
	A	B	C	D
Direct materials	$15.80	$19.70	$12.70	$15.40
Direct labor	17.80	21.20	15.60	9.60
Variable manufacturing overhead	4.60	5.80	8.30	5.30
Fixed manufacturing overhead	27.70	14.60	14.70	16.70
Unit product cost	$65.90	$61.30	$51.30	$47.00

Additional data concerning these products are listed below.

	Products
	A	B	C	D
Grinding minutes per unit	2.10	1.20	0.80	0.40
Selling price per unit	$79.70	$72.10	$68.90	$63.60
Variable selling cost per unit	$2.80	$3.30	$3.00	$3.70
Monthly demand in units	3,200	2,200	2,200	4,200.00

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?

Product B

Product A

Product C

Product D

B.)

(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $34,000 and will have a 6-year useful life and a $4,600 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,600 per year. The cost of these prescriptions to the pharmacy will be about $26,200 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to:

5.3 years

4.6 years

6 years

4.1 years

C.)

(Ignore income taxes in this problem.) The Zinger Corporation is considering an investment that has the following data:

	Year 1	Year 2	Year 3	Year 4	Year 5
Investment	$12,500	$3,900
Cash inflow	$2,900	$2,900	$9,500	$4,900	$4,900

Cash inflows occur evenly throughout the year. The payback period for this investment is: (Round your answer to 1 decimal place)

3 years

3.2 years

4 years

4.2 years