Redner,Inc Fixed Costs Are Applied to the Products on the Basis

question 90

Essay

Redner,Inc.produces three products.Data concerning the selling prices and unit costs of the three products appear below:

$\begin{array}{lccc} & & \text { Product } & \\& \mathrm{J} & \mathrm{K} & \mathrm{L} \\\text { Selling price } & \$ 80 & \$ 60 & \$ 90 \\\text { Variable costs } & 50 & 40 & 55 \\\text { Fixed costs } & 25 & 8 & 22 \\\text { Grinding machine time }&10 \mathrm{~min} . & 5 \mathrm{~min} & 7 \mathrm{~min} .\end{array}$

Fixed costs are applied to the products on the basis of direct labour hours.

Demand for the three products exceeds the company's productive capacity. The grinding machine is the constraint, with only 2,400 minutes of grinding machine time available this week.

Required:

a) Given the grinding machine constraint, which product should be emphasized? Support your answer with appropriate calculations.
b) If there is still unfilled demand for the product that the company should emphasize in part a) above, up to how much should the company be willing to pay for an additional hour of grinding machine time?

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Definitions:

Violent Programming

Media content that depicts physical or psychological harm in a manner that may promote aggressive behavior or desensitization to violence.

Television Violence

The depiction of aggressive actions, conflict, and brutality in television programming that can influence viewers' behavior and perceptions.

Children's Development

The physical, cognitive, social, and emotional growth that occurs from infancy through adolescence, forming the foundation for future wellbeing.

Parental Responsiveness

The degree to which parents are sensitive and responsive to their children's needs, emotions, and signals.