19. Luter Products Inc. makes two products–G16F and C53Z. Product G16F’s selling price is $308.00 and its
unit variable cost is $215.60. Product C53Z’s selling price is $84.00 and its unit variable cost is $58.80. The
monthly demand is 570 units for product G16F and 2,200 units for C53Z. The constrained resource is a
particular machine that is available for 10,100 minutes each month. Each unit of product G16F requires 14
minutes on this machine and each unit of product C53Z requires 3 minutes on this machine.
What is the maximum contribution margin the company can earn per month?
$70,476
$108,108
$78,540
$74,890
Production of product G16F would be 3,500 minutes ÷ 14 minutes per unit of G16F = 250 units of G16F.
20. Near Corporation’s two products have the following characteristics:
The constrained resource is a particular machine that is available for 10,400 minutes each month. Each unit of
product L06K requires 16 minutes on this machine and each unit of product G57S requires 5 minutes on this
machine.
How many units of product L06K should be produced each month?
975
500
0
175
Production of product L06K would be 2,800 minutes ÷ 16 minutes per unit of L06K = 175 units of L06K
21. Locken Products Inc. makes two products–Q96T and T62D. Product Q96T’s selling price is $48.00 and its
unit variable cost is $33.60. Product T62D’s selling price is $190.00 and its unit variable cost is $152.00. The
monthly demand is 3,340 units for product Q96T and 730 units for T62D. The constrained resource is a
particular machine that is available for 10,400 minutes each month. Each unit of product Q96T requires 2
minutes on this machine and each unit of product T62D requires 10 minutes on this machine.
How many units of product T62D should be produced each month?
0
372
730
1,398
Therefore, production of product T62D would be 3,720 minutes ÷ 10 minutes per unit of T62D = 372 units of
T62D.
22. The management of Tamondong Corporation has provided the following data concerning its two products:
The constrained resource is a particular machine that is available for 10,200 minutes each month.
How many units of product E25Y should be produced each month?
520
0
982
218
Therefore, production of product E25Y would be 3,270 minutes ÷ 15 minutes per unit of E25Y = 218 units of
E25Y
23. Daisley Products Inc. makes two products–B17U and R94X. Product B17U’s selling price is $110.00 and
its unit variable cost is $66.00. Product R94X’s selling price is $238.00 and its unit variable cost is $142.80.
The monthly demand is 1,290 units for product B17U and 490 units for R94X. The constrained resource is a
particular machine that is available for 10,300 minutes each month. Each unit of product B17U requires 5
minutes on this machine and each unit of product R94X requires 14 minutes on this machine.
The company is considering launching a new product that would have a variable cost of $178.00 per unit and
no avoidable fixed costs. It would require 3 minutes of the constrained resource. The absolute minimum
acceptable selling price for the new product should be:
$184.80
$204.40
$178.00
$198.40
Production of product R94X would be 3,850 minutes ÷ 14 minutes per unit of R94X = 275 units of R94X.
Because excess demand exists for product R94X, the opportunity cost is $6.80 per minute, the profitability
index for this product.
Selling price of new product ≥ Variable cost of the new product + (Opportunity cost per unit of the constrained
resource × Amount of the constrained resource required by a unit of the new product)
= $178.00 per unit + ($6.80 per minute × 3 minutes per unit) = $178.00 per unit + $20.40 per unit = $198.40
per unit
24. The management of Claypole Corporation has provided the following data concerning its two products–
H59 and C92:
The constrained resource is a particular machine that is available for 10,100 minutes each month. Each unit of
product H59 requires 5 minutes on this machine. Each unit of product C92 requires 3 minutes on this machine.
The company is considering launching a new product that would have a variable cost of $88.00 per unit. It
would require 11 minutes of the constrained resource. The absolute minimum acceptable selling price for the
new product should be:
$89.80
$107.80
$110.00
$88.00
Production of product H59 would be 2,060 minutes ÷ 5 minutes per unit of H59 = 412 units of H59. This
means that there exists unsatisfied demand for H59 because the total demand for this product is 1,430 units.
Therefore, the opportunity cost per unit of the constrained resource is $1.80 per minute, the profitability index
for product H59.
Selling price of new product ≥ Variable cost of the new product + (Opportunity cost per unit of the constrained
resource × Amount of the constrained resource required by a unit of the new product)
= $88.00 per unit + ($1.80 per minute × 11 minutes per unit) = $88.00 per unit + $19.80 per unit = $107.80 per
unit
25. The management of Kull Corporation has provided the following data concerning its two products–E76
