1) HBC Corporation makes three products that use compound W, the current constra

Question

1)

HBC Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below:

Product.............................................Standard.....Deluxe......Superior

Selling price/unit...................................$15............$12..............$14

Variable cost/unit..................................$4..............$8................$12

Kg of W used/unit.................................2kg..............4 kg...............1 kg

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.

Select one:

A. Standard,Deluxe,Superior

B. Deluxe,Standard,Superior

C. Superior,Standard,Deluxe

D. Standard,Superior,Deluxe

3)

Residual income:

Select one:

A. is the return on investment (ROI) percentage multiplied by average operating assets.

B. is the net operating income earned above a certain minimum required return on sales.

C. is the net operating income earned above a certain minimum required return on average operating assets.

D. will always be greater than zero.

Explanation / Answer

Answer 1 Option D Particulars Standard Delux Superior Selling price 15 12 14 Variable cost 4 8 12 Contribution per unit 11 4 2 KG of W used per unit 2 4 1 Contribution per KG of W 5.5 1 2 Rank 1 3 2 Answer 3 Option B

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