MC Qu. 22 Ockerman Corporation would like to determine... Ockerman Corporation w

Question

MC Qu. 22 Ockerman Corporation would like to determine...

Ockerman Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions. For example, the selling price of product A31N is $148.00 and its unit variable cost is $113.20. One unit of the product requires 7 ounces of the constrained resource. Monthly sales are 6,200 units. What is the profitability index for product A31N? (Round your answer to 2 decimal places.)

$16.17 per ounce

$4.97 per ounce

$21.14

0.24

Ockerman Corporation would like to determine the relative profitability of the company's products for purposes of making volume trade-off decisions. For example, the selling price of product A31N is $148.00 and its unit variable cost is $113.20. One unit of the product requires 7 ounces of the constrained resource. Monthly sales are 6,200 units. What is the profitability index for product A31N? (Round your answer to 2 decimal places.)

Explanation / Answer

B. $4.97 per ounce

Profitability index for a volume trade-off decision = Unit contribution margin / Amount of the constrained resource required by one unit = ($148.00 - $113.20) / 7 ounces = $34.80 / 7 ounces = $4.97 per ounce

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