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

question 61

Multiple Choice

Hamed Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions. The company has provided the following data for product U57S: $\begin{array}{lr}\text {Selling price }&\$ 28.00 \\\text {Variable cost per unit. }&16.80 \\\text {Unit contribution margin. }&\$ 11.20 \\\hline\text {Amount of the constrained resource used by the job }&&\text { 4 minutes }\\\text {Monthly unit sales. }&&\text {3,700 units }\end{array}$ What is the profitability index for product U57S?

• A)$41,440
• B)0.40
• C)$7.00 per minute
• D)$2.80 per minute

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Definitions:

Service Revenue

Income earned by a company for the provision of services to its customers.

Prepaid Expense

An expense that has been paid in advance and recorded as an asset until it becomes an actual expense.

Accrued Revenue

Income earned but not yet received, representing goods or services provided to customers on credit.

Supplies Used

The total value or quantity of materials and supplies consumed during a production or operational period.