Crane Company makes four products in a single facility. Data concerning these products appear below: Product A Selling Price per Unit = $35.30 Variable Manufacturing Cost per Unit =$16.50 Variable Selling Cost per Unit =$3.80 Milling Machine Minutes per Unit = 3.30 Monthly Demand in Units = 4,000 Product B Selling Price per Unit =$30,20 Variable Manufacturing Cost per Unit=$15.80 Variable Selling Cost per Unit =$1.60 Milling Machine Minutes per Unit =1.70 Monthly Demand in Units =1,000 Product C Selling Price per Unit = $20,80 Variable Manufacturing Cost per Unit =$7.90 Variable Selling Cost per Unit =$1.90 Milling Machine Minutes per Unit = 2.10 Monthly Demand in Units =3,000 Product D Selling Price per Unit= $26.00 Variable Manufacturing Cost per Unit =$8.50 Variable Selling Cost per Unit =$3.30 Milling Machine Minutes per Unit =2.50 Monthly Demand in Units =1,000 The milling machines are potentially a constraint in the production facility. A total of 22,600 minutes are available per month on these machines. Up to how much should the company be willing to pay for one additional hour of milling machine time if the company has made the best use of the existing milling machine capacity?
Crane Company makes four products in a single facility. Data concerning these products appear below:
Product A
Selling Price per Unit = $35.30
Variable
Variable Selling Cost per Unit =$3.80
Milling Machine Minutes per Unit = 3.30
Monthly Demand in Units = 4,000
Product B
Selling Price per Unit =$30,20
Variable Manufacturing Cost per Unit=$15.80
Variable Selling Cost per Unit =$1.60
Milling Machine Minutes per Unit =1.70
Monthly Demand in Units =1,000
Product C
Selling Price per Unit = $20,80
Variable Manufacturing Cost per Unit =$7.90
Variable Selling Cost per Unit =$1.90
Milling Machine Minutes per Unit = 2.10
Monthly Demand in Units =3,000
Product D
Selling Price per Unit= $26.00
Variable Manufacturing Cost per Unit =$8.50
Variable Selling Cost per Unit =$3.30
Milling Machine Minutes per Unit =2.50
Monthly Demand in Units =1,000
The milling machines are potentially a constraint in the production facility. A total of 22,600 minutes are available per month on these machines.
Up to how much should the company be willing to pay for one additional hour of milling machine time if the company has made the best use of the existing milling machine capacity?
(Round off to the nearest whole cent)
a. $11.00
b. $0.00
c. $4.55
d. $15.00
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