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Bruce Corporation makes four products in a single facility. These products have the following unit product costs:
| | Products |
| | A | B | C | D |
| Direct materials | $ | 19.90 | $ | 15.20 | $ | 20.80 | $ | 23.20 |
| Direct labor | | 12.20 | | 8.70 | | 10.50 | | 7.40 |
| Variable manufacturing overhead | $ | 1.60 | $ | 2.10 | $ | 2.00 | $ | 2.10 |
| Fixed manufacturing overhead | | 10.80 | | 11.90 | | 8.80 | | 10.70 |
| Unit product cost | | 44.50 | | 37.90 | | 42.10 | | 43.40 |
| |
Additional data concerning these products are listed below.
| | Products |
| | A | B | C | D |
| Grinding minutes per unit | | 1.20 | | 0.70 | | 0.60 | | 0.60 |
| Selling price per unit | $ | 59.30 | $ | 51.70 | $ | 59.50 | $ | 55.60 |
| Variable selling cost per unit | $ | 3.60 | $ | 1.50 | $ | 2.20 | $ | 3.60 |
| Monthly demand in units | | 4,000 | | 2,000 | | 4,000 | | 2,000 |
| |
The grinding machines are potentially the constraint in the production facility. A total of 9,000 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Which product makes the LEAST profitable use of the grinding machines? (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
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Product A
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Product B
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Product C
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Product D
Answer & Explanation
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