Jacobus Corporation has four products that use the same constrained resource. Da
ID: 2487599 • Letter: J
Question
Jacobus Corporation has four products that use the same constrained resource. Data concerning those products appear below: I100 I200 I300 I400 Unit selling price $39.20 $29.30 $11.50 $46.40 Unit variable cost 12.70 6.20 1.30 24.60 Unit contribution margin $27.00 $23.10 $10.20 $21.80 Amount of the constrained resource required 0.40 0.30 0.22 0.54 Profitability index $67.50 $77.00 $46.36 $40.37 The company does not have enough of the constrained resource to satisfy for demand of all four products. If salespersons are paid commissions that are a set percentage of sales, which product would they prefer to sell?
In other words, if it is a choice between selling one unit of one product and one unit of another, which product would they prefer to sell?
I400
I300
I200
I100
PLEASE SHOW WORK! THANKS.
Explanation / Answer
If sales persons are paid commissions that are a set percentage of sales, which product would they prefer to sell ?
They would prefer to sell the product that has the maximum price per unit. They would prefer to sell product - 1400, which has the highest unit selling price of $46.40.
No calculation is required for this.
The sales persons would not bother about the profitability index, which is lowest for product 1400.
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