Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Selling price Variable costs per unit: Direct materials. Direct labor Variable overhead Total variable cost per unit Contribution margin per unit Product A Product B Product C $ 70 $75 $ 85 16 40 2 58 $ 12 24 28 2 54 $ 21 20 32 3 55 $ 30 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per pound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,400 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials?

Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Selling price Variable costs per unit: Direct materials. Direct labor Variable overhead Total variable cost per unit Contribution margin per unit Product A Product B Product C $ 70 $75 $ 85 16 40 2 58 $ 12 24 28 2 54 $ 21 20 32 3 55 $ 30 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per pound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,400 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter19: Variable Costing (varcost)

Section: Chapter Questions

Problem 4R: To determine the effect of different levels of production on the company’s income, move to cell B7...

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