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

question 60

Multiple Choice

Garbarino Corporation would like to determine the relative profitability of a number of jobs. For illustration purposes, the company has provided the following data for job C54V: $\begin{array}{lr}\text {Revenue }&\$72,500\\\text {Avoidable cost }&58,000\\\text { Incremental profit}&\$14,500\\\\\text {Amount of the constrained resource used by the job. }&\text {250 hours }\\\text { Percentage of the total company profit for the period from the job}&30\%\\\end{array}$
What is the profitability index for job C54V?

• A)$290 per hour
• B)$58 per hour
• C)0.30
• D)0.20

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Definitions:

Inputs

Resources, information, or efforts that are put into a system or process to achieve outputs or outcomes.

Individual

Refers to a single, separate organism or entity, especially when considering human beings as distinct units with unique characteristics.

Equity Theory

A psychological theory suggesting that employees are motivated by fairness, and that perceived inequities can lead to dissatisfaction and changes in behavior.

Equity Exists

A condition or situation in which fairness is upheld, and all individuals have equal opportunities and treatment.