Question 1

Duhe Corporation is considering the following six long-term projects: $\begin{array}{cc}
&\text { Net Present Value } & \text { Investment Required } \
\text { Project } 1&\$ 23,798 & \$ 14,600 \
\text { Project } 2&\$ 20,862 & \$ 17,100 \
\text { Project } 3&\$ 19,350 & \$ 15,000 \
\text { Project } 4&\$ 30,051 & \$ 18,900 \
\text { Project } 5&\$ 21,120 & \$ 17,600 \
\text { Project } 6&\$ 18,550 & \$ 10,600
\end{array}$ Only $59,100 is available for investment in these projects.
Required:
a. Determine which projects should be accepted.
b. Determine the total net present value of all of the accepted projects if your plan from part (a) above is adopted.

Accepted Answer

The answer of Duhe Corporation is considering the following six...

Question 2

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

Accepted Answer

Since the salespersons are paid commissions that are a set percentage of sales, they would prefer to sell a product with a higher selling price. Therefore, the best choice would be I400, which has the highest selling price among the given products.

Question 3

The company is considering launching a new product that would have a variable cost of $168.00 per unit and no avoidable fixed costs. It would require 9 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:
A)$168.00
B)$171.00
C)$211.20
D)$195.00

Accepted Answer

The answer of The company is considering launching a new...

Question 4

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 answer of Reigel Corporation is about to launch a...

Question 5

The constraint at Mirsch Inc. is a key raw material. A total of 9,600 ounces of this constrained resource are available. Data concerning the company's two products, B01 and P46, appear below: $\begin{array}{rr}
&B 01 & \mathrm{P} 46 \
\text { Demand (units) }&660 & 570 \
\text { Selling price }&\$ 261.00 & \$ 276.00 \
\text { Variable cost }&\$ 234.90 & \$ 248.40
\end{array}$ Each unit of product B01 requires 9 ounces of the constrained raw material; each unit of product P46 requires 12 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $210 and that requires 9 ounces of the constrained resource. What is the minimum acceptable selling price for the new product?

Accepted Answer

The answer of The constraint at Mirsch Inc. is a...

Question 6

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 answer of Dimuzio Corporation has designed a new product,...

Question 7

The management of Lantieri Corporation is reviewing its policies concerning compensation of salespersons. The company has four products that use the same constrained resource. Data concerning those products appear below: $\begin{array}{lrrrr}
&\text { R100 } & \text { R200 } &{\text { R300 }} & \text { R400 } \
\text { Unit selling price. }&\$ 36.40 & \$ 20.20 & \$ 12.40 & \$ 36.70 \
\text { Unit variable cost }&\$ 17.10 & \$ 6.90 & \$ 2.70 & \$ 20.20 \
\text { Amount of the constrained resource required. }&0.43 & 0.35 & 0.23 & 0.58
\end{array}$ 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

The answer of The management of Lantieri Corporation is reviewing...

Question 8

Corner Corporation is considering six jobs for the upcoming period. Those jobs are listed below, along with relevant data. $\begin{array}{cc}
&\text { Incremental } & \text { Amount of Constrained } \
&\text { Profit } & \text { Resource Required (hours) }\
\text {Job 1 }&\$ 11,648 & 32 \
\text {Job 2 }&\$ 4,070 & 11 \
\text {Job 3 }&\$ 2,739 & 11 \
\text {Job 4 }&\$ 10,088 & 26 \
\text {Job 5 }&\$ 3,648 & 12 \
\text { Job 6}&\$ 7,590 & 22
\end{array}$ The total amount of the constrained resource that is available during the upcoming period is 91 hours.
Required:
a. Determine which jobs 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.

Accepted Answer

The answer of Corner Corporation is considering six jobs for...

Question 9

Minaya Corporation has two products, M20 and Y53, that use the same constrained resource--a critical raw material. Data concerning those products follow: $\begin{array}{lrr}
&\text { M20 } &{\text { Y53 }} \
\text { Selling price. }&\$ 192.00 & \$ 220.00 \
\text { Variable cost }&\$ 153.60 & \$ 176.00 \
\text { Constrained resource required per unit (grams) }&8 & 10 \
\text { Demand (units) }&820 & 760
\end{array}$ The total amount of the constrained resource available is 9,900 grams.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?

Accepted Answer

The answer of Minaya Corporation has two products, M20 and...

Question 10

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

Accepted Answer

The salespersons should emphasize the product that contributes the most to the company's profitability. This is typically determined by the product's contribution margin, which is the selling price minus the variable costs. Without specific financial data, we assume I200 has the highest contribution margin.

Question 11

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

Accepted Answer

The answer of From the standpoint of the entire company,...

Question 12

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

Accepted Answer

Salespersons would prefer to sell a product with a higher selling price since the commission would be a percentage of that higher selling price. Among the options given, I400 has the highest selling price, making it the best choice for salespersons to sell.

Question 13

The constrained resource at Nealen Corporation is a key raw material. A total of 9,800 ounces of the constrained resource are available. Data concerning the company's two products, B08 and O05, follow: $\begin{array}{lrr}
&\text { B08 } & {O05} \
\text { Demand (units) }&1,040 & 1,550 \
\text { Selling price }&\$ 102.00 & \$ 124.00 \
\text { Variable cost }&\$ 61.20 & \$ 86.80
\end{array}$ Product B08 requires 6 ounces of the constrained resource; product O05 requires 4 ounces.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?

Accepted Answer

The answer of The constrained resource at Nealen Corporation is...

Question 14

Tansley Corporation has two products that use the same constrained resource--a critical raw material. $\begin{array}{lrr}
&\text { B99 } & \text { V94 } \
\text { Selling price }&\$ 322.00 & \$ 152.00 \
\text { Variable cost }&\$ 257.60 & \$ 106.40 \
\text { Constrained resource required per unit (grams) }&14 & 8 \
\text { Demand (units) }&460 & 890
\end{array}$ The total amount of the constrained resource available is 9,500 grams.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?
d. The company is considering launching a new product whose variable cost is $167 and that requires 16 grams of the constrained resource. What is the minimum selling price for the new product?

Accepted Answer

The answer of Tansley Corporation has two products that use...

Question 15

Jendro 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. $\begin{array}{l}
&&\text { Amount of Constrained }\
&\text { Incremental Profit } & \text { Resource Required (hours) } \
\text {Project 1 }&\$ 4,654 & 13 \
\text {Project 2 }&\$ 7,110 & 18 \
\text {Project 3 }&\$ 8,814 & 26 \
\text {Project 4 }&\$ 4,997 & 19 \
\text {Project 5 }&\$ 7,750 & 31 \
\text { Project 6}&\$ 6,030 & 30
\end{array}$ The managing partner's time is the constraint in the firm. Only 76 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.

Accepted Answer

The answer of Jendro LLC is a consulting firm that...

Question 16

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

The answer of Musial Corporation has four products that use...

Quiz 2: Profitability Analysis

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?

The company is considering launching a new product that would have a variable cost of $168.00 per unit and no avoidable fixed costs. It would require 9 minutes of the constrained resource. The absolute minimum acceptable selling price for the new product should be:

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?

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?

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?