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

	products
	A		B		C		D
Direct materials	ps	19.90	ps	15.20	ps	20.80	ps	23.20
Direct labour		12.20		8.70		10.50		7.40
Variable manufacturing overhead	ps	1.60	ps	2.10	ps	2.00	ps	2.10
Fixed manufacturing costs		10.80		11.90		8.80		10.70
unit cost of product		44.50		37.90		42.10		43.40

Additional information about these products is listed below.

	products
	A		B		C		D
Grinding minutes per unit		1.20		0.70		0,60		0,60
Sale Price per Unit	ps	59.30	ps	51.70	ps	59.50	ps	55,60
Variable cost of sale per unit	ps	3.60	ps	1.50	ps	2.20	ps	3.60
Monthly demand in units		4,000		2,000		4,000		2,000

Grinding machines are potentially the limitation on the production floor. A total of 9,800 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

What product makes the LEAST profitable use of grinders?

Answer rating: 100% (QA)

To determine the product that makes the least profitable use of grinders we need to calculate the contribution margin per grinding minute for each pro... View the full answer