Barley Company Makes Four Products in a Single Facility The Milling Machines Are Potentially a Constraint in the Production

question 91

Multiple Choice

Barley Company makes four products in a single facility. Data concerning these products appear below:
$\begin{array}{|l|r|r|r|r|}\hline&&\text { Product }\\\hline & \mathbf{A} & \mathbf{B} & \mathbf{C} & \mathbf{D} \\\hline \text { Selling Price per Unit } & \$ 35.30 & \$ 30.20 & \$ 20.80 & \$ 26.00 \\\hline \text { Variable Manufacturing Cost per Unit } & \$ 16.50 & \$ 15.80 & \$ 7.90 & \$ 8.50 \\\hline \text { Variable Selling Cost per Unit } & \$ 3.80 & \$ 1.60 & \$ 1.90 & \$ 3.30 \\\hline \text { Milling Machine Minutes per Unit } & 3.20 & 1.80 & 2.20 & 2.50 \\\hline \text { Monthly Deman in Units } & 4,000 & 1,000 & 3,000 & 1,000 \\\hline\end{array}$
The milling machines are potentially a constraint in the production facility. A total of 22,600 minutes are available per month on these machines.
-What maximum amount (rounded to the nearest whole cent) should the company be willing to pay for one additional minute of milling machine time if the company has made the best use of the existing milling machine capacity?

• A) $0.
• B) $4.55.
• C) $11.00.
• D) $15.00.

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Definitions:

Total Activity

The measure of the total amount of work or production completed in a specific period.

Activity Cost Pool

A collection of costs grouped together based on similar cost drivers or activities, used in activity-based costing to allocate costs more accurately.

Activity Rate

A measure used in cost accounting to allocate overhead costs to products or services based on specific activities or processes.

Product R0

Tends to refer to an initial product concept or prototype, but not a standard key term. NO.