145) The Wester Corporation produces three products with the following costs and selling
prices:
Product
A
B
C
Selling price per unit
$
21
$
$
32
Variable cost per unit
$
11
$
$
18
Fixed cost per unit
$
5
$
$
9
Direct labor hours per unit
0.4
0.7
Machine hours per unit
0.2
0.2
The company has insufficient capacity to fulfill all of the demand for these three products.
If direct labor hours are the constraint, then the ranking of the products from the most profitable
to the least profitable use of the constrained resource is:
A) A, B, C
B) B, A, C
C) C, A, B
D) A, C, B
Selling price per unit
$
21
$
12
$
32
Contribution margin per unit (a)
$
10
$
5
$
14
produce one unit (b)
0.4
0.1
0.7
resource (a) ÷ (b)
$
25
$
50
$
20
Ranking
2
1
3
146) The Wester Corporation produces three products with the following costs and selling
prices:
Product
A
B
C
Selling price per unit
$
21
$
$
32
Variable cost per unit
$
11
$
$
18
Fixed cost per unit
5
9
Direct labor hours per unit
0.4
0.7
Machine hours per unit
0.2
0.2
The company has insufficient capacity to fulfill all of the demand for these three products.
If machine hours are the constraint, then the ranking of the products from the most profitable to
the least profitable use of the constrained resource is:
A) A, B, C
B) B, C, A
C) A, C, B
D) C, A, B
A
B
C
Selling price per unit
$
21
$
12
$
32
Contribution margin per unit (a)
$
10
$
5
$
14
produce one unit (b)
0.2
0.5
0.2
resource (a) ÷ (b)
$
50
$
10
$
70
Ranking
2
3
1
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.
147) How many minutes of milling machine time would be required to satisfy demand for all
four products?
A) 11,000
B) 28,200
C) 23,500
D) 31,400
A
B
C
D
Total
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
Minutes of milling time
3,300
16,400
7,800
3,900
31,400
148) Which product makes the LEAST profitable use of the milling machines?
A) Product A
B) Product B
C) Product C
D) Product D
149) Which product makes the MOST profitable use of the milling machines?
A) Product A
B) Product B
C) Product C
D) Product D
150) Up to how much should the company be willing to pay for one additional minute of milling
machine time if the company has made the best use of the existing milling machine capacity?
(Round off to the nearest whole cent.)
A) $4.20
B) $11.20
C) $18.80
D) $0.00
151) Bertucci Corporation makes three products that use the current constraint, which is a
particular type of machine. Data concerning those products appear below:
TC
GL
NG
Selling price per unit
$
494.40
$
449.43
$
469.68
Variable cost per unit
$
395.20
$
320.21
$
373.92
Minutes on the constraint
8.00
7.10
7.60
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.
A) TC, NG, GL
B) GL, NG, TC
C) GL, TC, NG
D) TC, GL, NG
GL
NG
Selling price per unit
$
494.40
$
449.43
$
469.68
Variable cost per unit
395.20
320.21
373.92
Contribution margin per unit (a)
$
$
129.22
$
required to produce one unit (b)
8.00
7.10
7.60
constrained resource (a) ÷ (b)
$
$
$
Ranking
152) Bertucci Corporation makes three products that use the current constraint, which is a
particular type of machine. Data concerning those products appear below:
TC
GL
NG
Selling price per unit
$
494.40
$
449.43
$
469.68
Variable cost per unit
$
395.20
$
320.21
$
373.92
Minutes on the constraint
8.00
7.10
7.60
Assume that sufficient constraint time is available to satisfy demand for all but the least
profitable product. Up to how much should the company be willing to pay to acquire more of the
constrained resource?
A) $12.40 per minute
B) $18.20 per minute
C) $129.22 per unit
D) $95.76 per unit
TC
GL
NG
Selling price per unit
$
494.40
$
449.43
$
469.68
Variable cost per unit
395.20
320.21
373.92
Contribution margin per unit (a)
$
$
129.22
$
required to produce one unit (b)
8.00
7.10
7.60
$
$
$
Ranking
129
Bruce Corporation makes four products in a single facility. These products have the following
unit product costs:
Products
A
B
C
D
Direct materials
$
19.90
$
15.20
$
20.80
$
23.20
Direct labor
12.20
8.70
10.50
7.40
Variable manufacturing overhead
1.60
2.10
2.00
2.10
Fixed manufacturing overhead
10.80
11.90
8.80
10.70
Unit product cost
$
44.50
$
37.90
$
42.10
$
43.40
Additional data concerning these products are listed below.
Products
A
B
C
D
Grinding minutes per unit
1.20
0.70
0.60
0.60
Selling price per unit
$
59.30
$
51.70
$
59.50
$
55.60
Variable selling cost per unit
$
3.60
$
1.50
$
2.20
$
3.60
Monthly demand in units
4,000
2,000
4,000
2,000
The grinding machines are potentially the constraint in the production facility. A total of 9,000
minutes are available per month on these machines.
Direct labor is a variable cost in this company.
153) How many minutes of grinding machine time would be required to satisfy demand for all
four products?
A) 10,800
B) 9,800
C) 10,500
D) 12,000
154) Which product makes the LEAST profitable use of the grinding machines?
A) Product A
B) Product B
C) Product C
D) Product D
155) Which product makes the MOST profitable use of the grinding machines?
A) Product A
B) Product B
C) Product C
D) Product D
156) Up to how much should the company be willing to pay for one additional minute of
grinding machine time if the company has made the best use of the existing grinding machine
capacity? (Round your intermediate calculations and final answer to 2 decimal places.)
A) $18.33
B) $12.20
C) $0.00
D) $19.30
157) The constraint at Pickrel Corporation is time on a particular machine. The company makes
three products that use this machine. Data concerning those products appear below:
VD
JT
SM
Selling price per unit
$
344.85
$
415.40
$
119.32
Variable cost per unit
$
270.18
$
310.88
$
91.96
Minutes on the constraint
5.70
6.70
1.90
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.
A) JT, SM, VD
B) JT, VD, SM
C) VD, SM, JT
D) SM, VD, JT
VD
JT
Selling price per unit
$
344.85
$
415.40
$
119.32
Variable cost per unit
270.18
310.88
Contribution margin per unit (a)
$
$
104.52
$
required to produce one unit (b)
5.70
6.70
1.90
constrained resource (a) ÷ (b)
$
$
$
Ranking
158) The constraint at Pickrel Corporation is time on a particular machine. The company makes
three products that use this machine. Data concerning those products appear below:
VD
JT
SM
Selling price per unit
$
344.85
$
415.40
$
119.32
Variable cost per unit
$
270.18
$
310.88
$
91.96
Minutes on the constraint
5.70
6.70
1.90
Assume that sufficient time is available on the constrained machine to satisfy demand for all but
the least profitable product. Up to how much should the company be willing to pay to acquire
more of this constrained resource?
A) $15.60 per minute
B) $13.10 per minute
C) $104.52 per unit
D) $27.36 per unit
VD
JT
Selling price per unit
$
344.85
$
415.40
$
119.32
Variable cost per unit
270.18
310.88
Contribution margin per unit (a)
$
$
104.52
$
required to produce one unit (b)
5.70
6.70
1.90
$
$
$
Ranking
159) The Carter Corporation makes products A and B in a joint process from a single input, R.
During a typical production run, 50,000 units of R yield 20,000 units of A and 30,000 units of B
at the split-off point. Joint production costs total $90,000 per production run. The unit selling
price for A is $4.00 and for B is $3.80 at the split-off point. However, B can be processed further
at a total cost of $60,000 and then sold for $7.00 per unit.
In a decision between selling B at the split-off point or processing B further, which of the
following items is not relevant:
A) the $60,000 cost to process B beyond the split-off point.
B) the $3.80 unit sales price of B at the split-off point.
C) the portion of the $90,000 joint production cost allocated to B.
D) the $7 unit selling price for B after further processing.
160) The Carter Corporation makes products A and B in a joint process from a single input, R.
During a typical production run, 50,000 units of R yield 20,000 units of A and 30,000 units of B
at the split-off point. Joint production costs total $90,000 per production run. The unit selling
price for A is $4.00 and for B is $3.80 at the split-off point. However, B can be processed further
at a total cost of $60,000 and then sold for $7.00 per unit.
If product B is processed beyond the split-off point, the financial advantage (disadvantage) as
compared to selling B at the split-off point would be:
A) $36,000 per production run
B) $96,000 per production run
C) ($42,000) per production run
D) ($10,000) per production run
Mae Refiners, Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed
in batches. A batch of sugar cane costs $60 to buy from farmers and $13 to crush in the
company’s plant. Two intermediate products, cane fiber and cane juice, emerge from the crushing
process. The cane fiber can be sold as is for $29 or processed further for $13 to make the end
product industrial fiber that is sold for $61. The cane juice can be sold as is for $40 or processed
further for $28 to make the end product molasses that is sold for $67.
161) What is the financial advantage (disadvantage) for the company from processing one batch
of sugar cane into the end products industrial fiber and molasses rather than not processing that
batch at all?
A) ($4) per batch
B) ($114) per batch
C) $18 per batch
D) $14 per batch
162) What is the financial advantage (disadvantage) for the company from processing the
intermediate product cane juice into molasses rather than selling it as is?
A) ($74) per batch
B) ($14) per batch
C) ($1) per batch
D) ($38) per batch
163) Which of the intermediate products should be processed further?
A) Cane fiber should be processed into industrial fiber; Cane juice should be processed into
molasses.
B) Cane fiber should be processed into industrial fiber; Cane juice should NOT be processed into
molasses.
C) Cane fiber should NOT be processed into industrial fiber; Cane juice should NOT be
processed into molasses.
D) Cane fiber should NOT be processed into industrial fiber; Cane juice should be processed into
molasses.