Ockerman 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 A31N is $144.00 and its unit variable cost is $115.20.One unit of the product requires 6 ounces of the constrained resource.Monthly sales are 5,700 units.What is the profitability index for product A31N?
A)$24.00 per ounce
B)$164,160
C)0.20
D)$4.80 per ounce

Question

Quizplus · Accepted Answer

Profitability index for a volume trade-off decision = Unit contribution margin F1F1F1S1F1F1F10 Amount of the constrained resource required by one unit = ($144.00 - $115.20)F1F1F1S1F1F1F10 6 ounces = $28.80 F1F1F1S1F1F1F10 6 ounces = $4.80 per ounce

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