Tork Corporation is about to announce a new product, J82, whose variable cost is $114.30 per unit and that would require 6.70 grams of a raw material that is the constrained resource in the company. The opportunity cost to use this constrained resource is $44.00 per gram. What is the minimum acceptable selling price for the new product? (Round your intermediate and final answers to 2 decimal places.)
Tork Corporation is about to announce a new product, J82, whose variable cost is $114.30 per unit and that would require 6.70 grams of a raw material that is the constrained resource in the company. The opportunity cost to use this constrained resource is $44.00 per gram. What is the minimum acceptable selling price for the new product? (Round your intermediate and final answers to 2 decimal places.)
Related questions
Outdoor Luggage, Inc., makes high-end hard-sided luggage for sports equipment. Data concerning three of the companyâs most popular models appear below.
| Ski Guard | Golf Guard | Fishing Guard | ||||||||||
| Selling price per unit | $ | 300 | $ | 380 | $ | 225 | ||||||
| Variable cost per unit | $ | 160 | $ | 170 | $ | 75 | ||||||
| Plastic injection molding machine processing time required to produce one unit | 7 minutes | 6 minutes | 4 minutes | |||||||||
| Pounds of plastic pellets per unit | 11 pounds | 13 pounds | 6 pounds | |||||||||
1. If we assume that the total time available on the plastic injection molding machine is the constraint in the production process, how much contribution margin per minute of the constrained resource is earned by each product? (Round your final answers to 2 decimal places.)
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2. If we assume that a severe shortage of plastic pellets has required the company to cut back its production so much that its new constraint has become the total available pounds of plastic pellets, how much contribution margin per pound of the constrained resource is earned by each product? (Round your final answers to 2 decimal places.)
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Brissett Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below:
| GK | LQ | XK | ||||
| Selling price per unit | $ | 326.37 | $ | 543.63 | $ | 496.00 |
| Variable cost per unit | $ | 251.92 | $ | 420.73 | $ | 397.58 |
| Time on the constraint (minutes) | 2.70 | 6.70 | 8.00 | |||
Required:
a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized.
b. 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? (Round your answer to 2 decimal places.)
