Question

Bacon Company makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct materials $14.30 $10.20 $11.00 $10.60 Direct labor 19.4 27.4 33.6 40.4 Variable manufacturing overhead 4.3 2.7 2.6 3.2 Fixed manufacturing overhead   26.50   34.80   26.60   37.20 Unit product cost $64.50 $75.10 $73.80 $91.40 Additional data concerning these products are listed below. Products A B C D Grinding minutes per unit 3.8 5.3 4.3 3.4 Selling price per unit $76.10 $93.50 $87.40 $104.20 Variable selling cost per unit $2.20 $1.20 $3.30 $1.60 Monthly demand in units 4,000 4,000 3,000 2,000 The grinding machines are the constraint in the production facility. A total of 53,600 minutes are available per month on these machines. Direct labor is a variable cost in this company. A. Which product makes the LEAST profitable use of the grinding machines? And, why? B. Which product makes the MOST profitable use of the grinding machines? And, why?

Answer 1

A. Which product makes the LEAST profitable use of the grinding machines? And, why?

Product-C. Because contr: per grinding minute of product-C(8.58) is the least in the above calculation.

B. Which product makes the MOST profitable use of the grinding machines? And, why?

Product-D. Because contr: per grinding minute of product-D(14.23)

is the highest in the above calculation.

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