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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Product A Product B Product C Selling price $ 70 Variable costs per unit: Direct materials Direct labor Variable overhead. Total variable cost per unit Contribution margin per unit $ 75 $ 85 16 24 20 40 28 32 2 2 3 58 54 55 $ 12 $ 21 $ 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? Multiple Choice О ○ $20.00 $16.00 ○ $14.00 О
Transcribed Image Text:Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Product A Product B Product C Selling price $ 70 Variable costs per unit: Direct materials Direct labor Variable overhead. Total variable cost per unit Contribution margin per unit $ 75 $ 85 16 24 20 40 28 32 2 2 3 58 54 55 $ 12 $ 21 $ 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? Multiple Choice О ○ $20.00 $16.00 ○ $14.00 О
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