Question

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: FE MB WPSelling price per unit $260.00 $365.80 $181.40Variable cost per unit $186.00 $269.88 $127.44Minutes on the constraint 5.20 7.00 4.00Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of this constrained resource? (Round your intermediate calculations and final answer to 2 decimal places.)(A) $14.23 per minute(B) $13.49 per minute(C) $53.96 per unit(D) $95.92 per unit

Answer 1

Answer:

Explanation:

Price Per Unit for FE = Selling price - Variable price = 260-186 = $74

Price Per Unit for MB = 365.80-269.88 = $95.92

Price Per Unit for WP = 181.40-127.44 = $53.96

Price per Minute for FE = 74/5.20 = $14.23

Price Per Minute for MB = 95.92/7 = $13.70

Price Per Minute for WP = 53.96/4 = $13.49

The least profitable unit per minute is WP ($13.49 per minute) or $53.96 per unit. So the answer is C