Broze Company makes four products in a single facility. These products have the following unit product costs:Products
A B C D
Direct materials $14.70 $10.60 $11.40 $11.00
Direct labor 19.80 27.80 34.00 40.80
Variable MOH 4.70 3.10 3.00 3.60
Fixed MOH 26.90 35.20 27.00 37.60
Unit product cost $66.10 $76.70 $75.40 $93.00
Additional data concerning these products are listed below.Products
A B C D
Grinding minutes per unit 4.20 5.70 4.70 3.80
Selling price per unit $76.50 $93.90 $87.80 $104.60
Variable selling cost/unit $2.60 $ 1.60 $ 3.70 $ 2.00
Monthly demand in units 4,400 4,400 3,400 2,400
The grinding machines are potentially the constraint in the production facility. A total of 54,000 minutes are available per month on these machines.
Direct labor is a variable cost in this company.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?