Silvio Enterprises Produces Three Products, with Costs and Selling Prices

question 146

Multiple Choice

Silvio Enterprises produces three products, with costs and selling prices as follows: Each product requires a certain number of minutes on the drill press. There is only one drill press available so it is the constraint for this product. Model D7 requires 2 minutes of drill press time, Model B3 requires 1 minute of drill press time, and Model F5 requires 7 minutes of drill press time. In what order should Silvio Enterprises emphasize its products to maximize its contribution margin? (Rank the products in order from most profitable to least profitable.)

• A)Model B3, Model D7, Model F5
• B)Model B3, Model F5, Model D7
• C)Model D7, Model B3, Model F5
• D)Model F5, Model D7, Model B3

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Supplier

An individual or company that provides goods or services to another entity under terms specified in a contract.

Asset Turnover

A financial metric assessing how well a company utilizes its assets to produce sales income.

Working Capital

A measure of a company’s liquidity; computed as current assets minus current liabilities.