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Nicholas, Inc. has provided the following unit data for review: Simple ProductAdvanced Product Selling price$22.75$55.00 Variable cost10.0034.50 Pounds of scarce raw material per unit35 Which product, Simple or Advanced, is most profitable for Nicholas, Inc. to manufacture

Sagot :

anthougo

The most profitable product for Nicholas, Inc. to manufacture based on unit data and contribution margin per unit of a scarce resource is Advanced Product.

What is a profitable product?

A profitable product is one whose sales revenue covers the costs of production, selling, and administrative support.

A profitable product can be determined by determining the contribution margin per unit and dividing this by the units of a scarce resource that it consumes.  The result is the contribution margin per unit of the scarce resource.

Thus, the product that yields the higher contribution margin per unit of a scarce resource is preferable to the rest.

Data and Calculations:

                                                    Simple Product     Advanced Product

Selling price                                          $22.75                      $55.00

Variable cost                                           10.00                         34.50

Contribution margin per unit               $12.75                       $20.50

Pounds of scarce raw material per unit   35                           35

Contribution margin per scare resource $0.364                 $0.586

Thus, the most profitable product for Nicholas, Inc. to manufacture based on the given unit data and the contribution margin per unit of a scarce resource is the Advanced Product.

Learn more about contribution margin per unit of scarce resource at https://brainly.com/question/15550773

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