Reference no: EM132514598

Brubacher Company makes four products in a single facility. These products have the following unit product costs:

                                                A                       B                      C                          D

Direct materials                $17.00            $19.30                  $15.70        $15.40

Direct labor                       18.40               14.10              16.70                15.50

Variable manufacturing overhead  4.30           2.80                  1.90              1.40

Fixed manufacturing overhead    20.70               22.50              17.90                11.60

Unit product cost                     $60.40              $58.70               $52.20           $43.90

Additional data concerning these products are listed below.

                                                             A                       B                             C                              D

Grinding minutes per unit                             2.80                   1.80               1.00                       0.70

Selling price per unit                                     $75.80                 $77.70             $70.80                $53.90

Variable selling cost per unit                           $1.90                   $2.10                 $3.60               $3.30

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

• The grinding machines are potentially the constraint in the production facility. A total of 20,500 minutes are available per month on these machines. Direct labor is a variable cost in the company.

Question 1: 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 off to the nearest whole cent.)

Group of answer choices

Option 1: $0.00

Option 2: $10.00

Option 3: $18.30

Option 4: $12.21