Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Additional data concerning these products are listed below.
The grinding machines are potentially the constraint in the production facility. A total of 9,000 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? (Round your intermediate calculations and final answer to 2 decimal places.)
A) $18.33
B) $12.20
C) $0.00
D) $19.30

Question

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:  Additional data concerning these products are listed below.
 The grinding machines are potentially the constraint in the production facility. A total of 9,000 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? (Round your intermediate calculations and final answer to 2 decimal places.)
A) $18.33 
B) $12.20 
C) $0.00 
D) $19.30

Quizplus · Accepted Answer

11eacbfc_c64b_e0e6_8ffe_2f17449faca2_TB7552_00 11eacbfc_c64c_07f7_8ffe_cde70411b998_TB7552_00 There is more demand for time on the grinding machine than it has capacity. The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $18.33 per minute for Product A.

Bruce Corporation Makes Four Products in a Single Facility