Question: ACME Incorporated produces multiple products. Data per unit for Product A is as follows: Selling price $25 Direct material 12 Direct labour 5 Variable

ACME Incorporated produces multiple products. Data per unit for Product A is

ACME Incorporated produces multiple products. Data per unit for Product A is as follows: Selling price $25 Direct material 12 Direct labour 5 Variable overhead 2 Fixed overhead 3 The direct labour rate is $20 per hour and material costs $3 per gram. Required: 1. Calculate the profitability of the product (profitability index) if there is a limit on the amount of labour available. 2. If Product B has a profitability index of $18, should the company focus on Product A or Product B to maximize profit?

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