Exam 31: Profitability Analysis

The same constrained resource is used by four different products at Swaim 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?

Fanion Corporation has two products,A33 and U39,that use the same constrained resource-a critical raw material.Data concerning those products follow: The total amount of the constrained resource available is 10,100 grams. 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?

Esquerra Corporation has provided the following data concerning its two products-T85 and G34: The total amount of the constrained resource available each month is 146,300 grams.Each unit of product T85 requires 19 grams of the constrained resource and each unit of product G34 requires 11 grams.What is the maximum contribution margin the company can earn per month?

Sullen Corporation would like to determine the relative profitability of a number of jobs.For example,the revenue from Job M02P is $86,800 and its avoidable costs amount to $60,760,resulting in an incremental profit of $26,040.Furthermore,the job requires 280 hours of the constrained resource.What is the profitability index for job M02P?

Burrington Products Inc. makes two products—Z74I and R53Y. Product Z74I's selling price is $102.00 and its unit variable cost is $71.40. Product R53Y's selling price is $432.00 and its unit variable cost is $302.40. The monthly demand is 2,500 units for product Z74I and 470 units for R53Y. The constrained resource is a particular machine that is available for 9,900 minutes each month. Each unit of product Z74I requires 3 minutes on this machine and each unit of product R53Y requires 16 minutes on this machine. -What is the maximum contribution margin the company can earn per month?

Galapon Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 10,100 minutes each month. Each unit of product P66G requires 4 minutes on this machine and each unit of product H98V requires 18 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?

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 the amount of time an artisan requires to make the model.

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

Saska 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?

Tork Corporation is about to announce a new product,J82,whose variable cost is $113.70 per unit and that would require 6.40 grams of a raw material that is the constrained resource in the company.The opportunity cost to use this constrained resource is $43.00 per gram.What is the minimum acceptable selling price for the new product?

Huddleston Corporation is considering the following six long-term projects: Only $63,800 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.

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?

Omoyosi 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 V66L: What is the profitability index for job V66L?

Garwood Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 10,100 minutes each month. Each unit of product K56J requires 10 minutes on this machine and each unit of product L72D requires 6 minutes on this machine. -What is the maximum contribution margin the company can earn per month?

Kleppe Corporation has two products that use the same constrained resource-a critical raw material. The total amount of the constrained resource available is 10,000 grams. 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? d.The company is considering launching a new product whose variable cost is $106 and that requires 7 grams of the constrained resource.What is the minimum selling price for the new product?

Whitacre Products Inc. makes two products—P32W and I90J. Product P32W's selling price is $44.00 and its unit variable cost is $26.40. Product I90J's selling price is $220.00 and its unit variable cost is $198.00. The monthly demand is 3,500 units for product P32W and 760 units for I90J. The constrained resource is a particular machine that is available for 9,800 minutes each month. Each unit of product P32W requires 2 minutes on this machine and each unit of product I90J requires 10 minutes on this machine. -How many units of product I90J should be produced each month?

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.

The management of Coppler Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 9,700 minutes each month. -How many units of product O85D should be produced each month?

Lesser 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. -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?

Shorr Corporation's two products have the following characteristics: The constrained resource is a particular machine that is available for 9,900 minutes each month. Each unit of product U29D requires 16 minutes on this machine and each unit of product X43P requires 2 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?