Hamed Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions.The company has provided the following data for product U57S: What is the profitability index for product U57S?
A)$41, 440
B)0.40
C)$7.00 per minute
D)$2.80 per minute

Question

Hamed Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions.The company has provided the following data for product U57S:   What is the profitability index for product U57S?
A)$41, 440 
B)0.40 
C)$7.00 per minute 
D)$2.80 per minute

Quizplus · Accepted Answer

Profitability index for a volume trade-off decision = Unit contribution margin ÷ Amount of the constrained resource required by one unit = $11.20 ÷ 4 minutes = $2.80 per minute

Hamed Corporation Would Like to Determine the Relative Profitability of the Company's