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Mcglathery Corporation: calculate a company is willing to pay to acquire a constrained resource

Question

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

 

 

UE

BI

CR

Selling price per unit

$335.15

$228.43

$199.18

Variable cost per unit

$259.32

$173.14

$159.67

Minutes on the constraint

7.20

4.00

5.20

 

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

 

a. $39.51 per unit

b. $13.82 per minute

c. $7.60 per minute

d. $75.83 per unit

 

 

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