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?
A)$1.20 per minute
B)$6.00 per minute
C)0.20
D)$12,240

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 = $7.20 F1F1F1S1F1F1F10 6 minutes = $1.20 per minute

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