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

question 5

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 rivets manufactured?

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

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Definitions:

Retains

Refers to the portion of earnings or profits that a company decides to keep rather than distribute to shareholders as dividends, often used for reinvestment.

Constant Ratio

A strategy involving maintaining a fixed percentage allocation among different asset classes.

Dividend Payout Ratio

A financial metric that shows the percentage of earnings a company distributes to its shareholders in the form of dividends.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs associated with making and selling the product, calculated as net income divided by revenue.