Question

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

	Products
	A		B		C		D
Direct materials	$	14.40	$	10.30	$	11.10	$	10.70
Direct labor		19.50		27.50		33.70		40.50
Variable manufacturing overhead		4.40		2.80		2.70		3.30
Fixed manufacturing overhead		26.60		34.90		26.70		37.30
Unit product cost	$	64.90	$	75.50	$	74.20	$	91.80

Additional data concerning these products are listed below.

	Products
	A		B		C		D
Grinding minutes per unit		3.90		5.40		4.40		3.50
Selling price per unit	$	76.20	$	93.60	$	87.50	$	104.30
Variable selling cost per unit	$	2.30	$	1.30	$	3.40	$	1.70
Monthly demand in units		4,100		4,100		3,100		2,100

The grinding machines are potentially the constraint in the production facility. A total of 53,700 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

How many minutes of grinding machine time would be required to satisfy demand for all four products?

Answer 1

Solution:

Computation of total minutes of grinding machine time required to satisfy the demand for all products
	Minutes per unit	Demand (Units)	Total Minutes Required
A	3.90	4100	15990
B	5.40	4100	22140
C	4.40	3100	13640
D	3.50	2100	7350
Total minutes required			59120