Exam 13: Profitability Analysis

Near Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 10, 400 minutes each month.Each unit of product L06K requires 16 minutes on this machine and each unit of product G57S requires 5 minutes on this machine. How many units of product L06K should be produced each month?

The management of Claypole Corporation has provided the following data concerning its two products-H59 and C92: The constrained resource is a particular machine that is available for 10, 100 minutes each month.Each unit of product H59 requires 5 minutes on this machine.Each unit of product C92 requires 3 minutes on this machine. What is the maximum contribution margin the company can earn per month?

The same constrained resource is used by four different products at Rodrigez Corporation.Data concerning those products appear below: The company does not have enough of the constrained resource to satisfy for demand of all four products.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?

Gastineau Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 9, 600 minutes each month.Each unit of product J45Z requires 19 minutes on this machine and each unit of product W47E requires 7 minutes on this machine. How many units of product J45Z should be produced each month?

Gastineau Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 9, 600 minutes each month.Each unit of product J45Z requires 19 minutes on this machine and each unit of product W47E requires 7 minutes on this machine. What is the maximum contribution margin the company can earn per month?

Jendro LLC is a consulting firm that is considering six projects for the upcoming period.The six projects under consideration are listed below, along with relevant data. The managing partner's time is the constraint in the firm.Only 76 hours of this constrained resource are available during the upcoming period. Required: a.Determine which projects 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.

The profitability index for a volume trade-off decision involving products should be computed by dividing the unit contribution margin of a product by the amount of the constrained resource required by one unit of the product.

Near Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 10, 400 minutes each month.Each unit of product L06K requires 16 minutes on this machine and each unit of product G57S requires 5 minutes on this machine. Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?

Relative profitability should be measured by dividing a segment's market share by its revenues.

Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?

A company that makes horsehair cowboy belts cannot meet the demand for belts due to a limited supply of artisans who know how to make the belts.To determine which models of the cowboy belts should be emphasized, the company should rank the models by dividing the unit contribution of each model by the selling price of the model.

The management of Kull Corporation has provided the following data concerning its two products-E76 and R73: The constrained resource is a particular machine that is available for 9, 900 minutes each month.Each unit of product E76 requires 15 minutes on this machine.Each unit of product R73 requires 3 minutes on this machine. The company is considering launching a new product that would have a variable cost of $55.00 per unit.It would require 5 minutes of the constrained resource.The absolute minimum acceptable selling price for the new product should be:

Reigel Corporation is about to launch a new product, I51, whose variable cost is $106.00 per unit and that would require 5.50 centiliters of a key raw material that is the company's constrained resource.The opportunity cost of this raw material is $54.00 per centiliter used. Required: What advice would you give to the company concerning the price that should be charged for the new product I51?

Garbarino 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 C54V: What is the profitability index for job C54V?

Hoop Corporation has four different products that use the same constrained resource.Data concerning those products appear below: The company does not have enough of the constrained resource to satisfy for demand of all four products.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?

The constrained resource at Nealen Corporation is a key raw material.A total of 9, 800 ounces of the constrained resource are available.Data concerning the company's two products, B08 and O05, follow: Product B08 requires 6 ounces of the constrained resource;product O05 requires 4 ounces. Required: a.Which product is most profitable, given the company's constraint? b.How much of each product should be produced? c.What is the total contribution margin if your plan in part (b)above is followed?

Duhe Corporation is considering the following six long-term projects: Only $59, 100 is available for investment in these projects. Required: a.Determine which projects should be accepted. b.Determine the total net present value of all of the accepted projects if your plan from part (a)above is adopted.

Luter Products Inc.makes two products-G16F and C53Z.Product G16F's selling price is $308.00 and its unit variable cost is $215.60.Product C53Z's selling price is $84.00 and its unit variable cost is $58.80.The monthly demand is 570 units for product G16F and 2, 200 units for C53Z.The constrained resource is a particular machine that is available for 10, 100 minutes each month.Each unit of product G16F requires 14 minutes on this machine and each unit of product C53Z requires 3 minutes on this machine. What is the maximum contribution margin the company can earn per month?

Musial Corporation has four products that use the same constrained resource.Data concerning those products appear below: The company does not have enough of the constrained resource to satisfy for demand of all four products. Required: a.If salespersons are paid commissions that are a set percentage of sales, which product would they prefer to sell? In other words, if it is a choice between selling one unit of one product and one unit of another, which product would they prefer to sell? b.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?

The management of Kull Corporation has provided the following data concerning its two products-E76 and R73: The constrained resource is a particular machine that is available for 9, 900 minutes each month.Each unit of product E76 requires 15 minutes on this machine.Each unit of product R73 requires 3 minutes on this machine. What is the maximum contribution margin the company can earn per month?