Question 1

What is the maximum contribution margin the company can earn per month?

Accepted Answer

A) $60,720 
B) $72,816 
C) $41,712 
D) $50,695 
A) $60,720 
B) $72,816 
C) $41,712 
D) $50,695

Question 2

When a company has a production constraint, the opportunity cost of using the constrained resource can be determined by multiplying the amount of the constrained resource used by the opportunity cost per unit of the constrained resource.

Accepted Answer

A) True 
 B)False

Question 3

Armster Corporation has provided the following data concerning its two products:   The profitability index for product B10E is closest to:

Accepted Answer

A) 0.61 
B) $12.40 per ounce 
C) 0.40 
D) $31.00 per ounce 
A) 0.61 
B) $12.40 per ounce 
C) 0.40 
D) $31.00 per ounce

Question 4

Efford Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions. For example, the selling price of product I14H is $36.00, its unit variable cost is $28.80, and its unit contribution margin is $7.20. One unit of the product requires 6 minutes of the constrained resource. Monthly sales are 1,700 units. What is the profitability index for product I14H?

Accepted Answer

A) $1.20 per minute 
B) $6.00 per minute 
C) 0.20 
D) $12,240 
A) $1.20 per minute 
B) $6.00 per minute 
C) 0.20 
D) $12,240

Question 5

How many units of product O85D should be produced each month?

Accepted Answer

A) 0 
B) 820 
C) 1,768 
D) 265 
A) 0 
B) 820 
C) 1,768 
D) 265

Question 6

How many units of product A19D should be produced each month?

Accepted Answer

A) 760 
B) 0 
C) 1,449 
D) 400 
A) 760 
B) 0 
C) 1,449 
D) 400

Question 7

Wholey Corporation has designed a new product, I00, whose variable cost is $139.70 per unit and that requires 7.90 minutes of the constrained resource. The opportunity cost is $51.00 per minute used of the constrained resource.
Required:
What advice would you give to the company concerning the price that should be charged for the new product I00?

Accepted Answer

Selling price of new product ≥ Variable

Question 8

From the standpoint of the entire company, if it is a choice between sales of one unit of one product versus another, which product should the salespersons emphasize?

Accepted Answer

A) P200 
B) P300 
C) P100 
D) P400 
A) P200 
B) P300 
C) P100 
D) P400

Question 9

Halama Corporation is considering six jobs for the upcoming period. Those jobs are listed below, along with relevant data.   The total amount of the constrained resource that is available during the upcoming period is 75 hours.
Required:
a. Determine which jobs should be accepted for the upcoming period.
b. Determine the total incremental profit for the upcoming period if your plan from part (a) above is adopted.

Accepted Answer

a. Rank the segments on the ba

Question 10

Bruck Corporation would like to determine the relative profitability of a number of jobs. For illustration purposes, the company has provided the following data for job D25Y:   What is the profitability index for job D25Y?

Accepted Answer

A) $108 per hour 
B) 0.20 
C) $540 per hour 
D) 0.28 
A) $108 per hour 
B) 0.20 
C) $540 per hour 
D) 0.28

Question 11

When long-term investment funds are the constraint and the company is choosing from among potential long-term projects, the profitability index should be computed by dividing the expected market share of the project by the amount of long-term investment funds required by the project.

Accepted Answer

A) True 
 B)False

What is the maximum contribution margin the company can earn per month?

When a company has a production constraint, the opportunity cost of using the constrained resource can be determined by multiplying the amount of the constrained resource used by the opportunity cost per unit of the constrained resource.

Armster Corporation has provided the following data concerning its two products: The profitability index for product B10E is closest to:

How many units of product O85D should be produced each month?

How many units of product A19D should be produced each month?

From the standpoint of the entire company, if it is a choice between sales of one unit of one product versus another, which product should the salespersons emphasize?

Bruck Corporation would like to determine the relative profitability of a number of jobs. For illustration purposes, the company has provided the following data for job D25Y: What is the profitability index for job D25Y?

When long-term investment funds are the constraint and the company is choosing from among potential long-term projects, the profitability index should be computed by dividing the expected market share of the project by the amount of long-term investment funds required by the project.

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Pricing Products and Services

Filters

Exam 21: Profitability Analysis

What is the maximum contribution margin the company can earn per month?

When a company has a production constraint, the opportunity cost of using the constrained resource can be determined by multiplying the amount of the constrained resource used by the opportunity cost per unit of the constrained resource.

Armster Corporation has provided the following data concerning its two products: The profitability index for product B10E is closest to:

How many units of product O85D should be produced each month?

How many units of product A19D should be produced each month?

From the standpoint of the entire company, if it is a choice between sales of one unit of one product versus another, which product should the salespersons emphasize?

Bruck Corporation would like to determine the relative profitability of a number of jobs. For illustration purposes, the company has provided the following data for job D25Y: What is the profitability index for job D25Y?

When long-term investment funds are the constraint and the company is choosing from among potential long-term projects, the profitability index should be computed by dividing the expected market share of the project by the amount of long-term investment funds required by the project.

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Job-Order Costing

Variable Costing and Segment Reporting: Tools for Management

Activity-Based-Costing: a Tool to Aid Decision Making

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Capital Budgeting Decisions

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based-Costing: a Tool to Aid Decision Making

A Capital Budgeting Decisions

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Performance Measurement in Decentralized Organizations

Pricing Products and Services

Filters