Cranston Corporation makes four products in a single facility. Data concerning these products appear below: Products A B C D Selling price per unit $ 42.30 $ 50.00 $ 37.60 $ 33.50 Variable manufacturing cost per unit $ 20.80 $ 30.70 $ 21.00 $ 19.90 Variable selling cost per unit $ 2.70 $ 2.10 $ 1.00 $ 2.40 Milling machine minutes per unit 3.30 4.10 2.60 1.30 Monthly demand in units 1,000 4,000 3,000 3,000 The milling machines are potentially the constraint in the production facility. A total of 28,200 minutes are available per month on these machines. How many minutes of milling machine time would be required to satisfy demand for all four products

Cranston Corporation

The total minutes of milling machine time required to satisfy demand for all four products = 31,400

Explanation:

a) Data and Calculations:

Products                                                        A            B            C            D

Selling price per unit                            $ 42.30 $ 50.00 $ 37.60 $ 33.50

Variable manufacturing cost per unit $ 20.80 $ 30.70  $ 21.00 $ 19.90

Variable selling cost per unit                 $ 2.70    $ 2.10    $ 1.00   $ 2.40

Total variable costs                              $ 23.50 $ 32.80  $22.00 $22.30

Contribution margin per unit                 $18.80   $17.20  $15.60   $11.20

Milling machine minutes per unit             3.30        4.10      2.60       1.30

Monthly demand in units                        1,000     4,000    3,000   3,000

Total minutes of milling machine time  3,300    16,400    7,800   3,900

Total minutes of milling machine time required to satisfy demand for all four products = 31,400 (3,300 + 16,400 + 7,800 + 3,900)

Total minutes available per month = 28,200

Shortfall minutes required per month = 3,200 (31,400 - 28,200)

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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