Question
River Plate Company makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct Materials
River Plate Company makes four products in a single facility. These products have the following unit product costs:
| Products | ||||
| A | B | C | D | |
| Direct Materials | $14.30 | $10.20 | $11.00 | $10.60 |
| Direct Labor | $19.40 | $27.40 | $33.60 | $40.40 |
| Variable manufacturing overhead | $4.30 | $2.70 | $2.60 | $3.20 |
| Fixed manufacturing overhead | $26.50 | $34.80 | $26.60 | $37.20 |
| Unit product cost | $64.50 | $75.10 | $73.80 | $91.40 |
Additional data concerning these products are listed below.
| Products | ||||
| A | B | C | D | |
| Processing minutes per unit | 3.8 | 5.3 | 4.3 | 3.4 |
| Selling price per unit | $76.10 | $93.50 | $87.40 | $104.20 |
| Variable selling cost per unit | $2.20 | $1.20 | $3.30 | $1.60 |
| Monthly demand in units | 4,000 | 4,000 | 3,000 | 2,000 |
The Processing machines are potentially the constraint in the production facility. A total of 53,600 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 processing machines?
| Product C | ||
| Product A | ||
| Product B | ||
| Product D |
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Current Issues In Auditing
Authors: Michael J Sherer, W Stuart Turley
3rd Edition
1853963658, 978-1853963650
