Mcbee Products Inc

question 16

Multiple Choice

Mcbee Products Inc. makes two products-C38S and V81Z. Product C38S's selling price is $91.00 and its unit variable cost is $72.80. Product V81Z's selling price is $200.00 and its unit variable cost is $180.00. The monthly demand is 890 units for product C38S and 680 units for V81Z. The constrained resource is a particular machine that is available for 10,000 minutes each month. Each unit of product C38S requires 7 minutes on this machine and each unit of product V81Z requires 10 minutes on this machine.
-The company is considering launching a new product that would have a variable cost of $191.00 per unit and no avoidable fixed costs. It would require 4 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

• A) $191.00
• B) $199.00
• C) $193.00
• D) $201.40

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Definitions:

Artisan

A skilled craftsperson who makes or creates things by hand that may be functional or strictly decorative.

Lien

A legal right or claim against a property, typically used as security for a debt or charge that must be paid off when the property is sold.

Innkeeper

An innkeeper is a person or the owner of an establishment that offers lodging, and sometimes meals and entertainment, to travelers.

Repairs

The process of fixing or restoring something that is damaged, broken, or worn out to bring it back to its original condition.