The constraint at Dreyfus Inc. is an expensive milling machine. The three produc

Question

The constraint at Dreyfus Inc. is an expensive milling machine. The three products listed below use this constrained resource. VY QX AM Selling price per unit......................... $78.65 $421.59 $145.92 Variable cost per unit........................ $62.40 $331.20 $113.28 Time on the constraint (minutes)...... 1.30 6.90 2.40 Required: a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized. Show your work!

Explanation / Answer

Contribution Margin = Selling price per unit - Variable Cost Per unit VY = 78.65 - 62.40 = 16.25 QX = 421.59 - 331.20 = 90.30 AM = 145.92 - 113.28 = 32.64 Time on the constraint (minutes) VY=1.30 QX=6.90 AM=2.40 Contribution margin per unit of the constrained resource VY=12.50 (Rank3) QX=13.10 (Rank2) AM=13.60 ((Rank1)

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