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Constrained Machine Resource at Rauchwerger Corporation

Question 24: (2 points)
The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

WX KD FS
Selling price per unit $197 $546.66 $231.84
Variable cost per unit $156.72 $421.54 $167.76
Minutes on the constraint 3.2 8.6 3.6

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 the constrained resource?

$17.8 per minute
$125.12 per unit
$12.59 per minute
$40.28 per unit

Solution Preview

Hi,
Contribution per unit = Selling price per unit - Variable cost per unit
WX =197-156.72 =$40.28

KD ...

Solution Summary

Solution shows how to calculate minimum cost per minute the company be willing to pay to acquire more of the constrained resource.

$2.19