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 $ 16.00 $ 19.90 $ 12.90 $ 15.60 Direct labor 18.00 21.40 15.80 9.80 Variable manufacturing overhead 4.80 6.00 8.50 5.50 Fixed manufacturing overhead 27.90 14.80 14.90 16.90 Unit product cost $ 66.70 $ 62.10 $ 52.10 $ 47.80 Additional data concerning these products are listed below. Products A B C D Grinding minutes per unit 2.20 1.30 0.90 0.50 Selling price per unit $ 80.70 $ 73.10 $ 69.90 $ 64.60 Variable selling cost per unit $ 3.00 $ 3.50 $ 3.20 $ 3.90 Monthly demand in units 3,400 2,400 2,400 4,400 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.)

Answer 1