Ryce Corporation is about to announce a new product, C72, whose variable cost is $118.70 per unit and that would require 9.40 grams of a raw material that is the constrained resource in the company. The opportunity cost to use this constrained resource is $60.00 per gram. What is the minimum acceptable selling price for the new product?
A) $564.00
B) $178.70
C) $682.70
D) $118.70

Question

Quizplus · Accepted Answer

To find the minimum acceptable selling price, we need to consider both the variable cost and the opportunity cost of the constrained resource. 
Variable cost per unit = $118.70
Opportunity cost of using 9.40 grams of the constrained resource = 9.40 grams x $60.00/gram = $564.00
Total cost per unit = $118.70 + $564.00 = $682.70
Therefore, the minimum acceptable selling price would be equal to the total cost per unit, which is $682.70. Therefore, the best choice is C).

Ryce Corporation Is About to Announce a New Product, C72