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

question 24

Multiple Choice

Reetz Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions.For illustration,the company has provided the following data for product A25H: $\begin{array}{llcc} \text {Selling price...................................................... } &\$58.00 \\ \text { Variable cost per unit....................................... } &\$46.40\\ \text {Amount of the constrained resource required by one unit...... } &\text { 2 grams}\\ \text { Monthly unit sales............................................. } &\text { 4,100 units }\\\end{array}$

What is the profitability index for product A25H?

• A)$47,560
• B)$29.00 per gram
• C)$5.80 per gram
• D)0.20

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Definitions:

Test Statistic

A value calculated from sample data during a hypothesis test to determine whether to reject the null hypothesis.

Randomly Selects

The process of choosing individuals or items from a population in such a way that each has an equal chance of being chosen.

Level of Significance

A threshold in statistical hypothesis testing, below which the null hypothesis is rejected.

Proportion of Wins

The ratio or fraction representing the number of successes or victories compared to the total number of trials or attempts.