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

question 69

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 }$
$\begin{array}{lrrrrrr}&\text { A}&\text { B}&\text { C}&\text { D}\\\text { Grinding minutes per unit } & 3.80 & 5.30& 4.30 & 3.40 \\\text { Selling price per unit } & \$ 76.1 0 & \$ 93.50 & \$ 87.40& \$ 104.20 \\\text { Variable selling cost per } & \$ 2.20 & \$ 1.20& \$ 3.30& \$ 1.60 \\\text { unit } \\\text { Monthly demand in units }& 4,000 & 4,000 & 3,00 0 & 2,000\end{array}$
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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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 off to the nearest whole cent.)

• A) $35.90
• B) $0.00
• C) $8.58
• D) $11.60

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Definitions:

Myelinated Axons

Axons that are covered with a fatty substance called myelin, which increases the speed at which electrical impulses propagate along the nerve cell.

Unmyelinated Axons

Nerve fibers lacking a myelin sheath, resulting in slower signal transmission compared to myelinated axons.

Electrochemical Impulses

Biological signals that neurons use to communicate information through an electrical charge transfer across their membrane.

Neurons

Unique cells within the nervous system that convey data to other neurons, muscles, or glands.