Asked by Christyon Pulley on May 22, 2024
Verified
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.)
A) $18.33
B) $12.20
C) $0.00
D) $19.30
Grinding Machine
A machine tool that uses an abrasive wheel as a cutting tool to shape or finish metals or other materials.
Existing Capacity
The maximum output that a facility can produce under normal working conditions within a given period.
- Calculate the highest expenditure a business should commit to in order to secure more of a scarce resource.
Verified Answer
DB
Domonique ByersMay 28, 2024
Final Answer :
A
Explanation : 
There is more demand for time on the grinding machine than it has capacity.The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $18.33 per minute for Product A.
Reference: CH11-Ref23
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:
There is more demand for time on the grinding machine than it has capacity.The company should be willing to pay up to the contribution margin per minute for the marginal job, which is $18.33 per minute for Product A.Reference: CH11-Ref23
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:
Learning Objectives
- Calculate the highest expenditure a business should commit to in order to secure more of a scarce resource.