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

question 28

Essay

Redner,Inc.produces three products.Data concerning the selling prices and unit costs of the three products appear below:
$\begin{array} {r} \quad\quad\quad \quad\quad\quad \quad\quad\quad\quad\quad\quad\quad\quad\text { Products }\\\end{array}\\ \begin{array}{|l|r|r|r|}\hline & \text { A } & \text { B } & \text { C } \\\hline \text { Selling price } & \$ 80 & \$ 60 & \$ 90 \\\hline \text { Variable costs } & 50 & 40 & 55 \\\hline \text { Fixed costs } & 25 & 8 & 22 \\\hline \text { Grinding machine time } & 10 \mathrm{~min} & 5 \mathrm{~min} & 7 \mathrm{~min} \\\hline\end{array}$

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:

Goal Setting

The process of identifying something that one aims to achieve, often through specific, measurable, attainable, relevant, and time-bound objectives.

Rehearsal

The practice or process of practicing an action or performance in preparation for a public presentation.

Continuous Reinforcement

A learning process in which a behavior is rewarded every time it occurs, leading to faster acquisition of the behavior.

Delayed Reinforcement

A strategy in which the reward or consequence for a behavior is presented after a significant time lapse, affecting the conditioning process.