The company is considering launching a new product that would have a variable cost of $88.00 per unit. It would require 11 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:
A)$89.80
B)$107.80
C)$110.00
D)$88.00

Question

Quizplus · Accepted Answer

To calculate the minimum acceptable selling price, we need to use the formula:
Minimum selling price = (variable cost per unit/ (constrained resource/time per unit)) + fixed cost per unit
Here, fixed cost per unit is not given, so we can ignore that. 
Plugging in the given values, we get:
Minimum selling price = (88/(11/60)) = $107.80 
Therefore, the absolute minimum acceptable selling price for the new product should be $107.80 or higher. Choice B is the only option that meets this requirement.

The Company Is Considering Launching a New Product That Would