Bruce Corporation makes four products in a single facility T

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 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? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-09-13

Multiple Choice

Product D

Product A

Product C

Product B

	Products
	A	B	C	D
Direct materials	$	16.90	$	20.80	$	13.80	$	16.50
Direct labor		18.90		22.30		16.70		10.70
Variable manufacturing overhead		5.70		6.90		9.40		6.40
Fixed manufacturing overhead		28.80		15.70		15.80		17.80
Unit product cost		70.30		65.70		55.70		51.40

Solution

A

B

C

D

DM

16.90

20.80

13.80

16.50

DL

18.90

22.30

16.70

10.70

V. mfr OH

5.70

6.90

9.40

6.40

V.selling cost

2.65

3.35

4.10

4.80

Variable cost pu (A)

44.15

53.35

44

38.4

SP pu (B)

85.20

77.60

74.40

69.10

Contribution pu

(C =B-A)

41.05

24.25

30.4

30.7

Grinding minutes pu (D)

2.10

1.15

0.70

1

Contribution per griding minute (C/D)

19.54

21.09

43.43

30.7

Ranking

4th

3rd

1st

2nd

Product C makes most profitable use of grinding machine

	A	B	C	D
DM	16.90	20.80	13.80	16.50
DL	18.90	22.30	16.70	10.70
V. mfr OH	5.70	6.90	9.40	6.40
V.selling cost	2.65	3.35	4.10	4.80
Variable cost pu (A)	44.15	53.35	44	38.4
SP pu (B)	85.20	77.60	74.40	69.10
Contribution pu (C =B-A)	41.05	24.25	30.4	30.7
Grinding minutes pu (D)	2.10	1.15	0.70	1
Contribution per griding minute (C/D)	19.54	21.09	43.43	30.7
Ranking	4th	3rd	1st	2nd