Brown Company Makes Four Products in a Single Facility $\quad$

question 138

Multiple Choice

Brown Company makes four products in a single facility. These products have the following unit product costs:

$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Product }$
$\begin{array}{|l|r|r|r|r|r} \hline& \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Direct Materials } & \$ 15.60 & \$ 19.50 & \$ 12.50 & \$ 15.20 \\\hline \text { Direct Labour } & \$ 17.60 & \$ 21.00 & \$ 15.40 & \$ 9.40 \\\hline \text { Variable Manufacturing Overhead } & \$ 4.40 & \$ 5.60 & \$ 8.10 & \$ 5.10 \\\hline \text { Fixed Manufacturing Overhead } & \$ 27.50 & \$ 14.40 & \underline{\$ 14.50} & \underline{\$ 16.50} \\\hline \text { Unit Product Cost } & \$ 65.10 & \$ 60.50 & \$ 50.50 & \underline{\$ 46.20} \\\hline\end{array}$

Additional data concerning these products are listed below.

$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Product }$
$\begin{array}{l|r|r|r|r|}\hline \text { Grinding Minutes per Unit } & \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Selling Price per Unit } & 2.00 & 1.10 & 0.70 & 0.30 \\\hline \text { Variable Selling Cost per Unit } & \$ 2.60 & 7 \$ 1.10 & \$ 67.90 & \$ 62.60 \\\hline \text { Monthly Demand in Units } & 3,000 & \$ 3.10 & \$ 2.80 & \$ 3.50 \\\hline\end{array}$


The grinding machines are potentially a constraint in the production facility. A total of 10,500 minutes are available per month on these machines. Direct labour is a variable cost in this company.
-Given the current capacity what is the greatest total contribution margin Brown Company can earn?

• A) $124,500.
• B) $329,325.
• C) $336,300.
• D) $570,903.

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