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Bacon Company makes four products in a single fecility These products heve the following unit product costs 14 30 $1020$1100$1060 9402740 3360 4040 Fwed menufecourng overnead 265034003720 $6450 $750 $73.80 914 Additional dens concerning these products ane lsted below nding minutes per unt Seting pace per unn seang cost per 57610 $93 508740 104 20 S 2.20 120$330 160 Morthly demand in unns ,0004000 .000 The grinding machines are the constraint in the productsion facility A total of 53600 minutes are avalabie per month on these machines Dieect labor is a variable cost in this company up 10 how much should the company bo wiling to pay for one addional minne of gnding mochne en, (the e ร่า4 nearest whole cent) has-ee bee-ene pr﹃-ta aoov, mond ane O $35 90 O sa58 O s1160 ViewSonic
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Solution: Answer: $ 8.58 Explanation: Contribution Margin per unit (Selling price - Variable cost) (e.g. for product A: (76.1-14.3-19.4-4.3-2.2) Grinding minutes per unit Contribution margin per Grinding mintue Ranking 35.90 52.00 $ 36.90 48.40 3.80 5.30 4.30 3.40 $ 9.45 $ 9.81 $ 8.58 $ 14.24 4 Monthly demand in minutes (demand units x minutes) 15200 21200 12900 6800 Allocation of 53600 minutes per Ranking (plug for C Shortage 15200 21200 10400 6800 0 2500 For Additional 1 minute of grinding, company will be willing to pay upto the contribution margin per mintue of product C.

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