Blomstrom Products Inc

question 49

Multiple Choice

Blomstrom Products Inc. makes two products-N81W and V55S. Product N81W's selling price is $20.00 and its unit variable cost is $12.00. Product V55S's selling price is $108.00 and its unit variable cost is $97.20. The monthly demand is 3,940 units for product N81W and 1,140 units for V55S. The constrained resource is a particular machine that is available for 10,400 minutes each month. Each unit of product N81W requires 2 minutes on this machine and each unit of product V55S requires 6 minutes on this machine.
-The company is considering launching a new product that would have a variable cost of $155.00 per unit and no avoidable fixed costs. It would require 5 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

• A) $175.00
• B) $156.80
• C) $164.00
• D) $155.00