16. The constraint at Dalbey Corporation is time on a particular machine. The co

Question

16.

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

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? (Round your intermediate calculations and final answer to 2 decimal places.)

$54.96 per unit

$19.23 per minute

$96.92 per unit

$12.78 per minute

The constraint at Dalbey Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

Explanation / Answer

Contribution Per Unit for FE = 235-160 = 75
Contribution Per Unit for MB = 340.80-243.88 = 96.92
Contribution Per Unit for WP = 156.40-101.44 = 54.96

Contribution per Minute for FE = 75/3.90 = $19.23
Contribution Per Minute for MB = 96.92/5.70 = 17.00
Contribution Per Minute for WP = 54.96/4.30 = 12.78

The least profitable unit per minute is WP at $12.78 per minute or $54.96 per unit. So the company should be willing to pay this

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