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

question 32

Multiple Choice

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

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Definitions:

Gym Memberships Revenue

Revenue generated from the sale of memberships or subscriptions to a fitness gym.

Prepaid Gym Memberships

Payments made in advance for gym services, representing a future expense for the gym that becomes realized as the service period elapses.

Prepaid Insurance

An asset account on the balance sheet that represents the advance payment of insurance premiums for future coverage periods.

Expired Insurance

Insurance coverage that has come to an end or is not in force due to the expiration of the policy term.