Hofbauer Corporation's Two Products Have the Following Characteristics: the Constrained

question 57

Multiple Choice

Hofbauer Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 10,400 minutes each month. Each unit of product M73O requires 6 minutes on this machine and each unit of product M26B requires 8 minutes on this machine.
-The company is considering launching a new product that would have a variable cost of $169.00 per unit and no avoidable fixed costs. It would require 16 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

• A) $226.60
• B) $245.80
• C) $169.00
• D) $172.60

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to buy at a given price.

Differential Pricing

A strategy where the same product or service is sold at different prices to different market segments based on various factors.

Supply Chain Surplus

Supply chain surplus refers to the total value generated by all participants in the supply chain, aiming to maximize the value created while minimizing costs.

Differential Costing

A technique used in management accounting to analyze costs that change under different business decisions, helping in budgeting and decision-making.