Question

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

	Products
	A	B	C	D
Direct materials	$15.40	$11.30	$12.10	$11.70
Direct labor	20.50	28.50	34.70	41.50
Variable manufacturing overhead	5.40	3.80	3.70	4.30
Fixed manufacturing overhead	27.60	35.90	27.70	38.30
Unit product cost	$68.90	$79.50	$78.20	$95.80

Additional data concerning these products are listed below.

	Products
	A	B	C	D
Grinding minutes per unit	4.90	6.40	5.40	4.50
Selling price per unit	$77.20	$94.60	$88.50	$105.30
Variable selling cost per unit	$ 3.30	$ 2.30	$ 4.40	$ 2.70
Monthly demand in units	5,100.00	5,100.00	4,100.00	3,100.00

The grinding machines are potentially the constraint in the production facility. A total of 54,700 minutes are available per month on these machines.
Direct labor is a variable cost in this company.

Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the existing grinding machine capacity? (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

for formulas and calculations, refer to the image below -

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