Block Corporation makes three products that use the current constraint, which is

Question

Block Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. 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

a.

b. Maximum amount willing to pay = Amount of contribution per unit = $14.17 per minute

ZA JK DH Selling Price per unit 325.95 543.21 511.00 Less: Variable cost per unit 251.97 420.78 397.63 Contribution per unit 73.98 122.43 113.37 Time per unit (in minutes) 4.80 8.50 8.00 Contribution per minute 15.41 14.40 14.17 Ranking I II III

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