Angellini,Inc.makes three kinds of conveyors for food manufacturers in the Southeastern states-the Model 3115B,the Model 510 and the Model 610A.

-The reason for the low profitability of the Model 610A conveyor appears to be:
A)The higher commission rate assigned on sales of this product
B)Low gross margin
C)Too much advertising for the given level of sales
D)Not enough administrative support
E)Inadequate distribution system

Question

Angellini,Inc.makes three kinds of conveyors for food manufacturers in the Southeastern states-the Model 3115B,the Model 510 and the Model 610A.

-The reason for the low profitability of the Model 610A conveyor appears to be:
A)The higher commission rate assigned on sales of this product 
B)Low gross margin 
C)Too much advertising for the given level of sales 
D)Not enough administrative support 
E)Inadequate distribution system

Quizplus · Accepted Answer

The low profitability is due to the low gross margin, which means the cost of producing the conveyor is too high compared to the revenue generated from sales. The other options do not directly relate to the profitability issue.