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.
-
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

---

Definitions:

Safe Working Conditions

Standards and practices that ensure the physical and mental well-being of employees in their workplace.

Necessary Repairs

Essential maintenance or fixes required to restore an item, property, or infrastructure to a functional or safe state.

Known Unsafe Conditions

Situations or environments that have been recognized as hazardous and could potentially cause harm or injury.

Constructive Trust

An equitable remedy imposed by a court to prevent unjust enrichment, treating the holder of property as if they were a trustee of it for the benefit of another.