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

question 55

Multiple Choice

Manchester 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 G94T is $304.00 and its unit variable cost is $243.20. One unit of the product requires 16 ounces of the constrained resource. Monthly sales are 9,300 units. What is the profitability index for product G94T?

• A) $565,440
• B) 0.20
• C) $3.80 per ounce
• D) $19.00 per ounce

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Definitions:

Monopoly Power

The control held by a single entity over the entire market for a product or service, allowing it to significantly influence or set prices.

Lawsuits

Legal actions taken by one party against another for the redress of grievances in a court of law.

Wal-Mart

A multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.

Natural Monopoly

A market condition where due to high fixed costs or unique product, a single firm can supply a product or service to an entire market at a lower cost than two or more firms.