Question

The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: WX KD FS Selling price per unit $ 335.03 $ 228.31 $ 199.06 Variable cost per unit $ 259.56 $ 173.38 $ 159.91 Minutes on the constraint 6.00 4.30 4.00 Assume 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 the constrained resource

Answer 1

Answer:

$9.79

Explanation:

The computation is shown below:

Particulars                   WX             KD               FS

Selling price per unit (i) $335.03 $228.31       $199.06

Less:

Variable cost per unit (ii) $259.56 $173.38      $159.91

Contribution margin per unit $75.47 $54.93      $39.15

Divided by

Minutes on the constraint (iv)   6         4.30                4

Contribution margin per minute $12.58 $12.77 $9.79