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Which product should Eric Inc focus on

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Question - Eric Incorporated produces 3 products. Data concerning the selling prices and unit costs of the three products appear below:

 

Product A

Product B

Product C

Selling price

$80

$60

$90

Variable costs

50

40

55

Fixed costs

25

8

22

Grinding machine time

10 min

5 min

7 min

Fixed costs are common costs applied to each product based on direct labour hours.

Demand for the three products exceeds the company's productive capacity. The grinding machine is the constraint, with only 2,400 minutes of grinding machine time available this week.

Required - Given the grinding machine constraint which product should Eric Inc. focus on? Show your calculations to support your answer.

Reference no: EM132956459

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