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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Brown Corporation makes four products in a single facility. These products have the following unit product costs:
| Â |
Products |
|||
| Â | A | B | C | D |
| Â Â Direct materials | $17.60 | $21.50 | $14.50 | $17.20 |
| Â Â Direct labor | 19.60 | 23.00 | 17.40 | 11.40 |
| Â Â Variable manufacturing overhead | 6.40 | 7.60 | 10.10 | 7.10 |
| Â Â Fixed manufacturing overhead |
29.50 |
16.40 |
16.50 |
18.50 |
| Â Â Unit product cost |
$73.10 |
$68.50 |
$58.50 |
$54.20 |
Additional data concerning these products are listed below.
| Â |
Products |
|||
| Â | A | B | C | D |
| Â Â Grinding minutes per unit | 2.45 | 1.50 | 1.05 | 1.35 |
| Â Â Selling price per unit | $88.70 | $81.10 | $77.90 | $72.60Â Â |
| Â Â Variable selling cost per unit | $3.35 | $4.05 | $4.80 | $5.50 |
| Â Â Monthly demand in units | 5,000 | 4,000 | 4,000 | 6,000.00 |
|
The grinding machines are potentially the constraint in the production facility. A total of 10,500 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 grinding machines?
| Â | Product B |
| Â | Product A |
| Â | Product D |
| Â | Product C |
Â
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