Question

Banfield Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: Selling Price Per Unit, VP(248.04) YI (230.66) WX (505.44) Variable Cost Per Unit, VP (190.71) YI (172.14) WX (388.80) Centiliters pf Compound W, VP(3.90) YI (3.80) WX (8.10)

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. (Points : 2) WX, VP, YI YI, VP, WX WX, YI, VP VP, WX, YI

Answer 1

Solution and Explanation:

The following is used to calcuate and analyze the ranks in the order of profitability on the basis of current data

Banfield Corporation

the Product details VP YI WX

Unit Selling price 248.04 230.66 505.44

Unit Variable cost 190.71 172.14 388.80

Unit Contribution

Margin 57.33 58.52 116.64

Centilitres of

Compound W per unit 3.90 3.80 8.10

Contribution Margin

per Centilitre of W= 14.70 15.40 14.40

Ranking Most profitable

to least profitable II I II

Thus, as per the above calculation, the Rank is YI, VP, WX