Question
Brubacher Company makes four products in a single facility. These products have the following unit product costs: ABCDDirect materials$17.00$19.30$15.70$15.40Direct labor18.4014.1016.7015.50Variable manufacturing overhead4.302.801.901.40Fixed manufacturing overhead20.7022.5017.9011.60Unit product
Brubacher Company makes four products in a single facility. These products have the following unit product costs:
ABCDDirect materials$17.00$19.30$15.70$15.40Direct labor18.4014.1016.7015.50Variable manufacturing overhead4.302.801.901.40Fixed manufacturing overhead20.7022.5017.9011.60Unit product cost$60.40$58.70$52.20$43.90
Additional data concerning these products are listed below.
ABCDGrinding minutes per unit2.801.801.000.70Selling price per unit$75.80$77.70$70.80$53.90Variable selling cost per unit$1.90$2.10$3.60$3.30Monthly demand in units4,0003,0003,0004,000
The grinding machines are potentially the constraint in the production facility. A total of 20,500 minutes are available per month on these machines. Direct labor is a variable cost in the company.
Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the existing grinding machine capacity? (Round off to the nearest whole cent.)
Group of answer choices
$0.00
$10.00
$18.30
$12.21
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