Exam 31: Profitability Analysis

Tuell 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 113 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 management of Bachor Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 9,800 minutes each month. -How many units of product A19D should be produced each month?

To encourage salespersons to sell the most profitable products,they should be paid sales commissions as straight percentage of the selling price of each product.

The management of Bachor Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 9,800 minutes each month. -What is the maximum contribution margin the company can earn per month?

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

Reddinger Corporation is about to launch a new product,Z49,whose variable cost is $143.70 per unit and that would require 5.80 centiliters of a key raw material that is the company's constrained resource.The opportunity cost of this raw material is $69.00 per centiliter used. Required: What advice would you give to the company concerning the price that should be charged for the new product Z49?

Relative profitability measures should be used only when the company is not faced with a constraint.

The same constrained resource is used by four different products at Kurdyla 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. -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?

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. -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?

Martorell Products Inc. makes two products—C39X and H08L. Product C39X's selling price is $54.00 and its unit variable cost is $43.20. Product H08L's selling price is $496.00 and its unit variable cost is $446.40. The monthly demand is 2,500 units for product C39X and 510 units for H08L. The constrained resource is a particular machine that is available for 10,300 minutes each month. Each unit of product C39X requires 3 minutes on this machine and each unit of product H08L requires 16 minutes on this machine. -What is the maximum contribution margin the company can earn per month?

Gorey Products Inc. makes two products—K36L and W81H. Product K36L's selling price is $345.00 and its unit variable cost is $310.50. Product W81H's selling price is $256.00 and its unit variable cost is $230.40. The monthly demand is 430 units for product K36L and 890 units for W81H. The constrained resource is a particular machine that is available for 10,000 minutes each month. Each unit of product K36L requires 15 minutes on this machine and each unit of product W81H requires 8 minutes on this machine. -What is the maximum contribution margin the company can earn per month?