Question

An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below:

		LN		JQ		RQ
Selling price per unit		$	165.88	$	313.11	$	494.52
Variable cost per unit		$	118.30	$	239.61	$	381.42
Minutes on the constraint			2.60		4.90		7.80

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. (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• RQ, LN, JQ

• RQ, JQ, LN

• LN, JQ, RQ

• JQ, RQ, LN

Answer 1

If there is a constraint of resource, we have to calculate contribution per unit of that constraint resource for ranking purpose. First Preference should be given to product with HIGHER Contribution per unit of constraint resource. Selling Price Per Unit Less: Variable Cost Per Unit Contribution Per Unit Minutes required Per Unit Contribution Per Minute LN 165.88 $ (118.30) $ 47.58 $ 2.6 18.30 $ JO 313.11 $ (239.61) $ 73.50 $ 4.9 15.00 $ RQ 494.52 (381.42) 113.10 7.8 14.50 Ranking The order of Ranking is LN, JO, RO So, Option 3 is Correct Answer.