Hudson Corporation, a Denver manufacturer produces three products and has provided the following information relating to its
Question:
Hudson Corporation, a Denver manufacturer produces three products and has provided the following information relating to its selling prices and unit costs for the three products.
Product | Product | Product | |
A | B | C | |
Selling price | $50 | $80 | $70 |
Variable costs | $40 | $50 | $55 |
Fixed costs | $15 | $20 | $12 |
Milling machine time (minutes) | 4 | 2 | 5 |
Fixed costs are applied on the basis of direct labor hours.
Demand for the three products exceeds the company's production capacity due to the milling machine's availability with only 2,400 minutes of machine availabe this week.
Given the milling machine constraint, rank the products by profitability. Enter the product letter in the answer box.
Most profitable
Profitable
Least profitable
Assuming that there is still unfilled demand for the most profitable product above, up to how much should the company be willing to pay for an additional hour of milling machine time? (Enter your answer in the answer box as a whole number, no decimals or dollar signs).
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach