The Constraint at Pickrel Corporation Is Time on a Particular

question 10

Multiple Choice

The constraint at Pickrel Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

-Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product.Up to how much should the company be willing to pay to acquire more of this constrained resource?

• A) $15.60 per minute
• B) $13.10 per minute
• C) $104.52 per unit
• D) $27.36 per unit

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Definitions:

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total costs, resulting in no net profit or loss.

Variable Cost

A variable cost changes in proportion to the level of production or business activity, such as raw materials or direct labor expenses.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Target Profit

The financial goal for the profit a company aims to achieve within a specific period.