Question 1

How many units of product B27D should be produced each month?

Accepted Answer

A) 390 
B) 200 
C) 0 
D) 784 
A) 390 
B) 200 
C) 0 
D) 784 B

Question 2

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

Accepted Answer

A) $35,155 
B) $46,404 
C) $34,852 
D) $35,460 
A) $35,155 
B) $46,404 
C) $34,852 
D) $35,460 D

Question 3

The company is considering launching a new product that would have a variable cost of $119.00 per unit. It would require 17 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

Accepted Answer

A) $119.00 
B) $180.20 
C) $122.60 
D) $183.60 
A) $119.00 
B) $180.20 
C) $122.60 
D) $183.60 B

Question 4

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

Accepted Answer

A) $52,806 
B) $36,788 
C) $32,742 
D) $40,266 
A) $52,806 
B) $36,788 
C) $32,742 
D) $40,266

Question 5

Dimuzio Corporation has designed a new product, V06, whose variable cost is $145.30 per unit and that requires 5.00 minutes of the constrained resource. The opportunity cost is $70.00 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 V06?

Accepted Answer

The selling price of the new p

Question 6

In the absence of a constraint, all business segments that are absolutely profitable should be retained.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) $43,872 
B) $42,428 
C) $57,632 
D) $41,120 
A) $43,872 
B) $42,428 
C) $57,632 
D) $41,120

Question 8

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

Accepted Answer

A) $19,788 
B) $18,770 
C) $28,950 
D) $19,249 
A) $19,788 
B) $18,770 
C) $28,950 
D) $19,249

Question 9

How many units of product T62D should be produced each month?

Accepted Answer

A) 0 
B) 372 
C) 730 
D) 1,398 
A) 0 
B) 372 
C) 730 
D) 1,398

Question 10

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?

Accepted Answer

The selling price of the new p

Question 11

Musial Corporation has four products that use the same constrained resource. Data concerning those products appear below: $\begin{array}{lrrrr}
&\mathrm{J} 100 & \mathrm{~J} 200 & \mathrm{~J} 300 & \mathrm{~J} 400 \
\text {Unit selling price }&\$ 33.40 & \$ 25.80 & \$ 12.10 & \$ 49.00 \
\text {Unit variable cost }&\$ 14.70 & \$ 7.70 & \$ 2.80 & \$ 29.40 \
\text {Amount of the constrained resource required. }&0.48 & 0.30 & 0.21 & 0.54
\end{array}$ 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?

Accepted Answer

a. If the salespersons are paid commissi

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

How many units of product L06K should be produced each month?

Accepted Answer

A) 975 
B) 500 
C) 0 
D) 175 
A) 975 
B) 500 
C) 0 
D) 175

Question 14

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) I200 
B) I100 
C) I400 
D) I300 
A) I200 
B) I100 
C) I400 
D) I300

Question 15

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 cost per unit of the most profitable product.

Accepted Answer

A) True 
 B)False

Question 16

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?

Accepted Answer

A) $6.80 per minute 
B) $95.20 per minute 
C) $44.00 per minute 
D) $8.80 per minute 
A) $6.80 per minute 
B) $95.20 per minute 
C) $44.00 per minute 
D) $8.80 per minute

Question 17

If a company is considering accepting a number of jobs, but there is insufficient production capacity to do all of them, then the jobs that require the greatest amount of the production capacity should be rejected.

Accepted Answer

A) True 
 B)False

Question 18

How many units of product E25Y should be produced each month?

Accepted Answer

A) 520 
B) 0 
C) 982 
D) 218 
A) 520 
B) 0 
C) 982 
D) 218

Question 19

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?

Accepted Answer

A) $20.40 per minute 
B) $3.60 per minute 
C) $54.00 per minute 
D) $6.80 per minute 
A) $20.40 per minute 
B) $3.60 per minute 
C) $54.00 per minute 
D) $6.80 per minute

Question 20

Reetz Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions. For illustration, the company has provided the following data for product A25H: $\begin{array}{lr}
\text {Selling price }&\$ 58.00 \
\text {Variable cost per unit }&\$ 46.40 \
\text { Amount of the constrained resource required by one unit.}&\text {2 grams }\
\text {Monthly unit sales }&\text {4,100 units }\
\end{array}$
 What is the profitability index for product A25H?

Accepted Answer

A) $47,560 
B) $29.00 per gram 
C) $5.80 per gram 
D) 0.20 
A) $47,560 
B) $29.00 per gram 
C) $5.80 per gram 
D) 0.20

How many units of product B27D should be produced each month?

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

The company is considering launching a new product that would have a variable cost of $119.00 per unit. It would require 17 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

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

In the absence of a constraint, all business segments that are absolutely profitable should be retained.

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

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

How many units of product T62D should be produced each month?

How many units of product L06K 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?

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 cost per unit of the most profitable product.

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?

If a company is considering accepting a number of jobs, but there is insufficient production capacity to do all of them, then the jobs that require the greatest amount of the production capacity should be rejected.

How many units of product E25Y should be produced each month?

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?

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Exam 2: Profitability Analysis

How many units of product B27D should be produced each month?

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

The company is considering launching a new product that would have a variable cost of $119.00 per unit. It would require 17 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

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

In the absence of a constraint, all business segments that are absolutely profitable should be retained.

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

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

How many units of product T62D should be produced each month?

How many units of product L06K 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?

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 cost per unit of the most profitable product.

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?

If a company is considering accepting a number of jobs, but there is insufficient production capacity to do all of them, then the jobs that require the greatest amount of the production capacity should be rejected.

How many units of product E25Y should be produced each month?

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?

Pricing Products and Services

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