Use the Following Information to Answer the Question(s) Below -What Is the Gross Margin Per Minute of Plugs Manufactured

question 38

Multiple Choice

Use the following information to answer the question(s) below.
Cerebro Manufacturing produces four types of structural support fittings-plugs, rails, rivets, and clips-which are machined on two CNC machining centers. The machining centers have a capacity of 250,000 minutes per year. The gross margin per unit and machining requirements are shown in the spreadsheet below. $\begin{array}{|l|l|l|l|l|l|l|}\hline&{\text { A }} & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\\hline& \text { Cerebro } && & & & \\1&\text { ManufacturingModel } & & & & & \\\hline 2\\\hline 3 & \text { Product } & \text { Plugs } & \text { Rails } & \text { Rivets } & \text { Clips }& \begin{array}{l}\text { Machine } \\\text { Capacity } \\\text { (mins./year) }\end{array} \\\hline 4 & \text { Gross margin/unit } & \$ 0.40 & \$ 1.20 & \$ 0.80 & \$ 1.10 & \\\hline 5 & \text { Minutes/unit } & 1 & 2 & 3 & 1.5 & 250,000 \\\hline 6 & \text { Gross margin/minute } & \\\hline 7 & \text { Maximum production } & \\\hline 8 & \text { Profit } & \\\hline\end{array}$
-What is the gross margin per minute of plugs manufactured?

• A) $ 0.60
• B) $ 0.73
• C) $ 0.40
• D) $ 0.27

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Definitions:

Directly Traced

Refers to costs or expenses that can be directly linked to a specific product, service, or department.

Product Costs

Expenses directly incurred from the manufacturing of products, including direct materials, direct labor, and manufacturing overhead.

Manufacturing Margin

The difference between the sales revenue of manufactured goods and the cost of their direct materials and direct labor.

Variable Selling

Costs associated with selling a product that vary with the level of sales activity, such as commissions or shipping fees.