Francke Corporation Would Like to Determine the Relative Profitability of a Number

question 51

Multiple Choice

Francke Corporation would like to determine the relative profitability of a number of jobs. For example, job H29O has revenues of $86,400 and avoidable costs of $69,120, resulting in an incremental profit of $17,280. The job requires 160 hours of the constrained resource. The job is responsible for 13% of the company's total profit for the period. What is the profitability index for job H29O?

• A)$108 per hour
• B)$540 per hour
• C)0.13
• D)0.20

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Definitions:

Expected Rate of Return

The profit or loss one anticipates on an investment, considering all potential outcomes and their likelihoods.

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