Block Corporation makes three products that use the current constraint, which is
ID: 2474763 • Letter: B
Question
Block Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: ZA JK DH Selling price per unit $ 325.95 $ 543.21 $ 511.00 Variable cost per unit $ 251.97 $ 420.78 $ 397.63 Time on the constraint (minutes) 4.80 8.50 8.00
Assume that sufficient constraint time is available 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?
Assume that sufficient constraint time is available 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?
Explanation / Answer
ZA JK DH Selling price per unit 325.95 543.21 511.00 variable cost per unit 251.97 420.78 397.63 contribution margin per unit 73.98 122.43 113.37 Amount of the constrained resource required to produce one unit 4.80 8.50 8.00 Contribution margin per unit of the constrained resource 73.98/4.80 = 15.41 122.43/8.50 = 14.40 113.37/8.00 = 14.17 Ranking 1 2 3