Question
Brown Corporation makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct materials $15.70
| Brown Corporation makes four products in a single facility. These products have the following unit product costs: |
| Products | ||||
| A | B | C | D | |
| Direct materials | $15.70 | $19.60 | $12.60 | $15.30 |
| Direct labor | 17.70 | 21.10 | 15.50 | 9.50 |
| Variable manufacturing overhead | 4.50 | 5.70 | 8.20 | 5.20 |
| Fixed manufacturing overhead | 27.60 | 14.50 | 14.60 | 16.60 |
| Unit product cost | $65.50 | $60.90 | $50.90 | $46.60 |
Additional data concerning these products are listed below.
| Products | ||||
| A | B | C | D | |
| Grinding minutes per unit | 2.05 | 1.15 | 0.75 | 0.35 |
| Selling price per unit | $79.20 | $71.60 | $68.40 | $63.10 |
| Variable selling cost per unit | $2.70 | $3.20 | $2.90 | $3.60 |
| Monthly demand in units | 3,100 | 2,100 | 2,100 | 4,100.00 |
| 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 A
Product B
Product C
Product D
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Financial accounting
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
9th edition
978-0132751216, 132751127, 132751216, 978-0132751124
