Products
A
B
C
D
Direct materials
$ 13.80
$ 9.70 $ 10.50 $ 10.10
Direct labor
18.90
26.90
33.10
39.96
Variable manufacturing overhead
3.80
2.20
2.10
2.70
Fixed manufacturing overhead
26.00 34.30 26.10 36,78
Unit product cost
$ 62.50 $ 73.10 $ 71.80 $ 89.40
Additional data concerning these products are listed below.
Grinding minutes per unit
Products
A
B
C
D
Selling price per unit
3.30
4.60
3.86
2.90
Variable selling cost per unit
$ 75.60 $ 93.00 $ 86.99 $ 103.76
Monthly demand in units
$ 1.70
$ 0.76
$ 2.80
$ 1.10
3,500
3,500
2,500
2,700
The grinding machines are potentially the constraint in the production facility. A total of 44,000 minutes are available per month on these machines.
Direct labor is a variable cost in this 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?
Note: Round your intermediate calculations to 2 decimal places.
Multiple Choice
$10.11
$13.52
$5.06
$17.21