Question

An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below:

		LN		JQ		RQ
Selling price per unit		$	162.19	$	308.37	$	425.73
Variable cost per unit		$	133.07	$	241.77	$	297.89
Minutes on the constraint			1.60		4.50		9.40

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-09-13

Multiple Choice

• LN, JQ, RQ

• RQ, LN, JQ

• RQ, JQ, LN

• JQ, RQ, LN

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

	Products
	A		B		C		D
Direct materials	$	14.40	$	10.30	$	11.10	$	10.70
Direct labor		19.50		27.50		33.70		40.50
Variable manufacturing overhead		4.40		2.80		2.70		3.30
Fixed manufacturing overhead		26.60		34.90		26.70		37.30
Unit product cost	$	64.90	$	75.50	$	74.20	$	91.80

Additional data concerning these products are listed below.

	Products
	A		B		C		D
Grinding minutes per unit		3.90		5.40		4.40		3.50
Selling price per unit	$	76.20	$	93.60	$	87.50	$	104.30
Variable selling cost per unit	$	2.30	$	1.30	$	3.40	$	1.70
Monthly demand in units		4,100		4,100		3,100		2,100

The grinding machines are potentially the constraint in the production facility. A total of 53,700 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

How many minutes of grinding machine time would be required to satisfy demand for all four products?

ultiple Choice

• 13,740

• 59,120

• 43,130

• 53,700

Answer 1

1
	LN	JQ	RQ
Selling price per unit	162.19	308.37	425.73
Less: Variable cost per unit	133.07	241.77	297.89
Contribution margin per unit	29.12	66.60	127.84
Minutes on the constraint	1.60	4.50	9.40
Contribution margin per minute	18.20	14.80	13.60
Rank	1	2	3
The products should be emphasized in the order LN, JQ, RQ
Option 1 is correct
2
	A	B	C	D	Total
Monthly demand in units	4100	4100	3100	2100
X Grinding minutes per unit	3.90	5.40	4.40	3.50
Total Grinding minutes required	15990	22140	13640	7350	59120
Option 2 59,120 is correct