Crane Corporation makes four products in a single facility. Data concerning thes
ID: 2577957 • Letter: C
Question
Crane Corporation makes four products in a single facility. Data concerning these products appear below:
Products
A
B
C
D
Selling price per unit
$35.30
$30.20
$20.80
$26.00
Variable manufacturing cost per unit
$16.50
$15.80
$7.90
$8.50
Variable selling cost per unit
$3.80
1.60
1.90
3.30
Milling machine minutes per unit
3.30
1.70
2.10
2.50
Monthly Demand in Units
4,000
1,000
3,000
1,000
The milling machines are potentially the constraint in the production facility. A total of 22,600 minutes are available per month on these machines.
Which product makes the MOST profitable use of the milling machines?
Product A
Product B
Product C
Product D
Products
A
B
C
D
Selling price per unit
$35.30
$30.20
$20.80
$26.00
Variable manufacturing cost per unit
$16.50
$15.80
$7.90
$8.50
Variable selling cost per unit
$3.80
1.60
1.90
3.30
Milling machine minutes per unit
3.30
1.70
2.10
2.50
Monthly Demand in Units
4,000
1,000
3,000
1,000
Explanation / Answer
Determine Which product makes the MOST profitable use of the milling machines?
so answer is b) Product B
Product A Product B Product C Product D Selling price per unit 35.30 30.20 20.80 26.00 Variable manufacturing cost per unit 16.50 15.80 7.90 8.50 Variable selling cost per unit 3.80 1.60 1.90 3.30 Contribution margin per unit 15 12.80 11 14.2 Milling machine minutes per unit 3.3 1.7 2.1 2.5 Contribution per minute 4.55 7.53 5.24 5.68 Rank 4 1 3 2