Reference: 09-14
Crane Company Makes Four Products in a Single

question 15

Multiple Choice

Reference: 09-14
Crane Company makes four products in a single facility. Data concerning these products appear below: $$\begin{array} { | l | l | l | l | l | } \hline & \text { Product } & \\\hline & A & B & C & D \\\hline \text { Selling price per unit } & \$ 35.30 & \$ 30.20 & \$ 20.80 & \$ 26.00 \\\hline \text { Variable manuf. cost per unit } & \$ 16.50 & \$ 15.80 & \$ 7.90 & \$ 8.50 \\\hline \text { Variable selling cost per unit } & \$ 3.80 & \$ 1.60 & \$ 1.90 & \$ 3.30 \\\hline \text { Milling machine minutes per unit } & 3.30 & 1.70 & 2.10 & 2.50 \\\hline \text { Monthly demand in units } & 4,000 & 1,000 & 3,000 & 1,000 \\\hline\end{array}$$ The milling machines are potentially the constraint in the production facility. A total of 22,600 minutes are available per month on these machines.
-Up to how much should the company be willing to pay for one additional hour of milling machine time if the company has made the best use of the existing milling machine capacity

• A)$11.25.
• B)$15.50.
• C)$4.55.
• D)$0.00.

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Definitions:

Current Liabilities

Short-term financial obligations due within one year or within the entity's operating cycle if longer.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, reducing its book value on the balance sheet.

Liability Account

An accounting record that captures the amount of money a firm owes to outsiders, including debts and obligations.

Credit Account Balance

A credit account balance refers to the total amount of credit available in a person's or organization's account, after considering all debits and credits.