Question

Brown Corporation makes four products in a single fecity These productts have the foilowing unt gradut cost Podus C Direct maas 00 S890 ss20 9.30 Deect lebor 2630 3230 30 Veabe manactuing oveee Fixed manacuring ovehead 300 t40 130 190 25.20 s5930 3350 2530 as so Unt raduct co S0090 420 Addtional data conceming these products ae listed below Products A Grinding mes per unt Sellng price pwr 250 300 300 210 S02 90 574 80 9220 s610 Variable seling cest per un s.90 $200 $30 Monely demand in unts 270000 20o.00 yoo00 190000 The grinding machines are potentially the constraint in the producton facity A total of 23,000 minues are available per month on these machines Direct labor is a variable ceet in ts company Up to how much should the company be wiling to pay for one addsional minute of grinding machine tme 2 decimal places) the company has made the best use of the existing grinding machine capecity? (Round your intermediate calculations and eal anwer to O sa60 O s2490 O s680 O $1793

Answer 1

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Brown Corporation
Contribution statement	A	B	C	D
Sell Price	74.80	92.20	86.10	102.90	A
Less: Variable cost
Direct materials	10.00	8.90	9.70	9.30
Direct Labor	18.10	26.50	22.30	29.10
Variable Overhead	3.00	1.40	1.30	1.90
Variable selling expense	0.90	0.10	2.00	0.30
Total Variable cost	32.00	36.90	35.30	40.60	B
Contribution per unit	42.80	55.30	50.80	62.30	C=A-B
Grinding mins per unit	2.50	3.00	3.00	2.10	D
Contribution per minute	17.12	18.43	16.93	29.67	E=D/C
Rank	3.00	2.00	4.00	1.00
Grinding mins available		23,000.00
Demand for D	1,900.00
Grinding mins for D		3,990.00
Grinding mins available		19,010.00
Demand for B	2,700.00
Grinding mins for B		8,100.00
Grinding mins available		10,910.00
Demand for A	2,700.00
Grinding mins for A		6,750.00
Grinding mins available		4,160.00
Demand for C	1,700.00
Grinding mins for C		5,100.00
Shortage of time		940.00
Product C is the lease profitable product so it should be grinded at last. There is a shortage of time by 940 minutes. So the company should pay maximum of contribution per minute grinding machine from C is $ 16.93.
Note:
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