In: Accounting
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 | 1.20 | 0.70 | 0.60 | 0.60 | ||||
Selling price per unit | $ | 59.30 | $ | 51.70 | $ | 59.50 | $ | 55.60 |
Variable selling cost per unit | $ | 3.60 | $ | 1.50 | $ | 2.20 | $ | 3.60 |
Monthly demand in units | 4,000 | 2,000 | 4,000 | 2,000 | ||||
The grinding machines are potentially the constraint in the production facility. A total of 9,000 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Which product makes the least profitable use of the grinding machines?
Product A
Product B
Product C
Product D