Bacon Company Makes Four Products in a Single Facility $\quad$

question 14

Multiple Choice

Bacon Company makes four products in a single facility. These products have the following unit product costs:
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Products }$
$\begin{array}{lrrrr}&\text { A}&\text { B}&\text { C}&\text { D}\\\text { Direct materials } & \$ 14.30 & \$ 10.20& \$ 11.00& \$ 10.60 \\\begin{array}{l}\text { Direct labor }\end{array} & 19.40 & 27.40 & 33.60 & 40.40 \\\text { Variable manufacturing } & 4.30 & 2.70 & 2.60 & 3.20 \\\text { overhead } & & & & \\\text { Fixed manufacturing } & 26.50 & 34.80 & 26.60 & 37.20 \\\text { overhead } \\\text { Unit product cost }& \$ 64.50 & \$ 75.10 & \$ 73.80 & \$ 91.40\end{array}$
Additional data concerning these products are listed below.
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Products }$
$\begin{array}{lrrrrrr}&\text { A}&\text { B}&\text { C}&\text { D}\\\text { Grinding minutes per unit } & 3.80 & 5.30& 4.30 & 3.40 \\\text { Selling price per unit } & \$ 76.1 0 & \$ 93.50 & \$ 87.40& \$ 104.20 \\\text { Variable selling cost per } & \$ 2.20 & \$ 1.20& \$ 3.30& \$ 1.60 \\\text { unit } \\\text { Monthly demand in units }& 2,000 & 4,000 & 3,00 0 & 2,000\end{array}$

The grinding machines are the constraint in the production facility. A total of 53,600 minutes is available per month on these machines.
Direct labor is a variable cost in this company.
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Which product makes the LEAST profitable use of the grinding machines?

• A) Product A
• B) Product B
• C) Product C
• D) Product D

Analyze the effects of competitive markets on the pricing and quantity of goods, considering external costs and benefits.

Determine the optimal level of pollution emissions considering external benefits and costs.

Evaluate the impact of technology and production methods on pollution and environmental sustainability.

Comprehend the role of government policies in achieving socially optimal outcomes in the presence of externalities.

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