Cranston Corporation makes four products in a single facility. Data concerning these products appear below:
The milling machines are potentially the constraint in the production facility. A total of 28,200 minutes are available per month on these machines.
-Up to how much should the company be willing to pay for one additional minute of milling machine time if the company has made the best use of the existing milling machine capacity? (Round off to the nearest whole cent.)
A) $4.20
B) $11.20
C) $18.80
D) $0.00

Question

Cranston Corporation makes four products in a single facility. Data concerning these products appear below:
  The milling machines are potentially the constraint in the production facility. A total of 28,200 minutes are available per month on these machines.
-Up to how much should the company be willing to pay for one additional minute of milling machine time if the company has made the best use of the existing milling machine capacity? (Round off to the nearest whole cent.)
A) $4.20 
B) $11.20 
C) $18.80 
D) $0.00

Quizplus · Accepted Answer

11ea7761_1616_afc1_81a5_dd510bc1b8e0_TB2580_00 The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $4.20 per minute for Product B.

Cranston Corporation Makes Four Products in a Single Facility