Question
In: Accounting
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
| Products | |||||||||||||||
| A | B | C | D | ||||||||||||
| Direct materials | $ | 14.45 | $ | 10.35 | $ | 11.15 | $ | 10.75 | |||||||
| Direct labor | 19.55 | 27.55 | 33.75 | 40.55 | |||||||||||
| Variable manufacturing overhead | 4.45 | 2.85 | 2.75 | 3.35 | |||||||||||
| Fixed manufacturing overhead | 26.65 | 34.95 | 26.75 | 37.35 | |||||||||||
| Unit product cost | $ | 65.10 | $ | 75.70 | $ | 74.40 | $ | 92.00 | |||||||
Additional data concerning these products are listed
below.
| Products | |||||||||||||||
| A | B | C | D | ||||||||||||
| Grinding minutes per unit | 3.80 | 5.30 | 4.30 | 3.40 | |||||||||||
| Selling price per unit | $ | 76.25 | $ | 93.65 | $ | 87.55 | $ | 104.35 | |||||||
| Variable selling cost per unit | $ | 2.35 | $ | 1.35 | $ | 3.45 | $ | 1.75 | |||||||
| Monthly demand in units | 4,060 | 4,060 | 3,060 | 2,060 | |||||||||||
The grinding machines are the constraint in the production
facility. A total of 53,900 minutes is available per month on these
machines.
Direct labor is a variable cost in this company.
Up to how much should the company be willing to pay for one
additional minute of grinding machine time if the company has made
the best use of the existing grinding machine capacity? (Round off
to the nearest whole cent.)
Solutions
Expert Solution
Solution :
(1) Contribution per Minute of Grinding Machine :
| A | B | C | D | |
| Sale Price per Unit | 76.25 | 93.65 | 87.55 | 104.35 |
| Direct Material | 14.45 | 10.35 | 11.15 | 10.75 |
| Direct Labor | 19.55 | 27.55 | 33.75 | 40.55 |
| Variable OH | 4.45 | 2.85 | 2.75 | 3.35 |
| Variable Selling Cost | 2.35 | 1.35 | 3.45 | 1.75 |
| Contribution per Unit | $ 35.45 | $ 51.55 | $ 36.45 | $ 47.95 |
| Grinding Minutes per Unit | 3.80 | 5.30 | 4.30 | 3.40 |
| Contribution per Minute | $ 9.33 | $ 9.73 | $ 8.48 | $ 14.10 |
(2) Current Utilization of Machine :
| Total Available Minutes | 53,900 |
| Less : Production of D (2,060 * 3.40) | 7004 |
| Available Minute after D | 46,896 |
| Less : Production of B (4,060 * 5.30) | 21,518 |
| Available Minute after B | 25,378 |
| Less : Production of A (4,060 * 3.80) | 15,428 |
| Available Minute after A | 9,950 |
| Minutes required for Production of C (3,060 * 4.30) | 13,158 |
(2) Conclusion : Since the demand of product C is not fulfiled company can pay additional $ 8.48 per Minute which is the contribution per Minute of Product C.
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ekkarill92 answered 1 year agoRelated Solutions
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs: Products A B C D
Direct materials $ 14.90 $ 10.80 $ 11.60 $ 11.20 Direct labor 20.00
28.00 34.20 41.00 Variable manufacturing overhead 4.90 3.30 3.20
3.80 Fixed manufacturing overhead 27.10 35.40 27.20 37.80 Unit
product cost $ 66.90 $ 77.50 $ 76.20 $ 93.80 Additional data
concerning these products are listed below. Products A B C D
Grinding minutes per unit...
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.85
$
10.75
$
11.55
$
11.15
Direct labor
19.95
27.95
34.15
40.95
Variable manufacturing overhead
4.85
3.25
3.15
3.75
Fixed manufacturing overhead
27.05
35.35
27.15
37.75
Unit product cost
$
66.70
$
77.30
$
76.00
$
93.60
Additional data concerning these products are listed
below.
Products
A
B
C
D
Grinding minutes per unit...
Bacon Company makes four products in a single facility. These products have the following unit product...
Bacon Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.30
$
10.20
$
11.00
$
10.60
Direct labor
19.40
27.40
33.60
40.40
Variable manufacturing overhead
4.30
2.70
2.60
3.20
Fixed manufacturing overhead
26.50
34.80
26.60
37.20
Unit product cost
$
64.50
$
75.10
$
73.80
$
91.40
Additional data concerning these products are listed
below.
Products
A
B
C
D
Grinding minutes per unit...
Master Company makes four products in a single facility. These products have the following unit product...
Master Company makes four products in a single facility. These
products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
19.90
$
15.20
$
20.80
$
23.20
Direct labor
12.20
8.70
10.50
7.40
Variable manufacturing overhead
$
1.60
$
2.10
$
2.00
$
2.10
Fixed manufacturing overhead
10.80
11.90
8.80
10.70
Unit product cost
44.50
37.90
42.10
43.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
16.30
$
20.20
$
13.20
$
15.90
Direct labor
18.30
21.70
16.10
10.10
Variable manufacturing overhead
5.10
6.30
8.80
5.80
Fixed manufacturing overhead
28.20
15.10
15.20
17.20
Unit product cost
$
67.90
$
63.30
$
53.30
$
49.00
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
13.10
$
9.00
$
9.80
$
9.40
Direct labor
18.20
26.20
32.40
39.20
Variable manufacturing overhead
3.10
1.50
1.40
2.00
Fixed manufacturing overhead
25.30
33.60
25.40
36.00
Unit product cost
59.70
70.30
69.00
86.60
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
2.60
3.20
3.10
2.20...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
19.90
$
15.20
$
20.80
$
23.20
Direct labor
12.20
8.70
10.50
7.40
Variable manufacturing overhead
1.60
2.10
2.00
2.10
Fixed manufacturing overhead
10.80
11.90
8.80
10.70
Unit product cost
$
44.50
$
37.90
$
42.10
$
43.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.80
$
10.70
$
11.50
$
11.10
Direct labor
19.90
27.90
34.10
40.90
Variable manufacturing
overhead
4.80
3.20
3.10
3.70
Fixed manufacturing
overhead
27.00
35.30
27.10
37.70
Unit product cost
66.50
77.10
75.80
93.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
4.30
5.80
4.80
3.90...
Bruce Corporation makes four products in a single facility. These products have the following unit product...
Bruce Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct materials
$
14.60
$
10.50
$
11.30
$
10.90
Direct labor
19.70
27.70
33.90
40.70
Variable manufacturing overhead
4.60
3.00
2.90
3.50
Fixed manufacturing overhead
26.80
35.10
26.90
37.50
Unit product cost
65.70
76.30
75.00
92.60
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
4.10
5.60
4.60
3.70...
Brown Corporation makes four products in a single facility. These products have the following unit product...
Brown Corporation makes four products in a single facility.
These products have the following unit product costs:
Products
A
B
C
D
Direct
materials
$13.10
$9.00
$9.80
$9.40
Direct labor
18.20
26.20
32.40
39.20
Variable
manufacturing overhead
3.10
1.50
1.40
2.00
Fixed manufacturing
overhead
25.30
33.60
25.40
36.00
Unit product
cost
$59.70
$70.30
$69.00
$86.60
Additional data concerning these
products are listed below.
Products
A
B
C
D
Grinding minutes per
unit
2.60
3.20
3.10
2.20
Selling price per
unit...
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