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Multiple Choice Quiz
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1
Grady Corporation would like to determine the relative profitability of various jobs. The company has provided the following data for the first job analyzed. The revenue earned from job will equal $145,000 and the avoidable cost is $116,000. The amount of the constrained resource used by the job is 500 hours. The percentage of the total company profit for the period from the job is 30%. What is the profitability index for the job?
A)$58 per hour
B)$290 per hour
C)0.20
D)0.30
2
Kubasiak Corporation would like to determine the relative profitability of various jobs. The company has provided the following data for the first job analyzed. The revenue earned from job will equal $197,200, the avoidable cost is $138,040, and the incremental profit is $59,160. The amount of the constrained resource used by the job is 680 hours. What is the profitability index for the job?
A)0.30
B)$290 per hour
C)$203 per hour
D)$87 per hour
3
Sikokis Corporation has provided the following data concerning its two products. Product A, which has a monthly demand of 1,500 units, has a contribution margin of $127.50 per unit and requires 17 grams per unit. Product B, which has a monthly demand of 7,300 units, has a contribution margin of $52.00 per unit and requires 5 grams per unit. The total amount of the constrained resource available each month is 49,250 grams. What is the maximum contribution margin the company can earn per month?
A)$570,850
B)$475,225
C)$453,457
D)$438,250
4
The unit contribution margin of one of the products made by Eaton Company is $25.20, which was determined by subtracting the variable cost per unit of $100.80 from the selling price of $126.00. Six grams of the constrained resource are required to make one unit of product. The monthly demand for the product is 4,200 units. On a per gram basis, what is the profitability index for this product?
A)0.20
B)0.19
C)$5.00
D)$4.20
5
The opportunity cost of using one unit of the constrained resource in a volume trade-off decision is equal to the profitability index:
A)of the product with the greatest sales.
B)for the company's most profitable existing product.
C)for the company's least profitable product—even if none of the product is currently being made.
D)for the product whose production would be cut back if necessary.





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