Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution margin for one unit of each product follow: Selling price Less: Variable expenses: Direct materials Direct labour Other variable expenses Total variable expenses Contribution margin Contribution margin per kilogram A $149.00 O Product A O Product B O Product C 27.00 104.00 16.00 16.00 74.30 38.00 117.30 158.00 $31.70 $ 52.00 The same raw material is used in all three products and costs $4 per kilogram. Baker Company has only 11,500 kilograms of material on hand and will not be able to obtain any more material for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. Direct labour costs $25 per hour. Product B $210.00 Required: 1. Compute the amount of contribution margin that will be obtained per kilogram of material used in each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Highest price A C $205.00 78.00 16.00 70.75 164.75 $40.25 B per kilogram 2. Which orders would you recommend that the company work on next week-the orders for product A, product B or product C? C 3. A foreign supplier could furnish Baker with additional stocks of the raw material at a substantial premium over the usual price. If there is unfilled demand for all three products, what is the highest price that Baker Company should be willing to pay for an additional kilogram of materials? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution margin for one unit of each product follow: Selling price Less: Variable expenses: Direct materials Direct labour Other variable expenses Total variable expenses Contribution margin Contribution margin per kilogram A $149.00 O Product A O Product B O Product C 27.00 104.00 16.00 16.00 74.30 38.00 117.30 158.00 $31.70 $ 52.00 The same raw material is used in all three products and costs $4 per kilogram. Baker Company has only 11,500 kilograms of material on hand and will not be able to obtain any more material for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. Direct labour costs $25 per hour. Product B $210.00 Required: 1. Compute the amount of contribution margin that will be obtained per kilogram of material used in each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Highest price A C $205.00 78.00 16.00 70.75 164.75 $40.25 B per kilogram 2. Which orders would you recommend that the company work on next week-the orders for product A, product B or product C? C 3. A foreign supplier could furnish Baker with additional stocks of the raw material at a substantial premium over the usual price. If there is unfilled demand for all three products, what is the highest price that Baker Company should be willing to pay for an additional kilogram of materials? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer complete question please,,,,,answer in text form please (without image)
Transcribed Image Text:Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution margin for one unit of each
product follow:
Selling price
Less: Variable expenses:
Direct materials
Direct labour
Other variable expenses
Total variable expenses
Contribution margin
Contribution margin per kilogram
A
$149.00
O Product A
O Product B
O Product C
The same raw material is used in all three products and costs $4 per kilogram. Baker Company has only 11,500 kilograms of material
on hand and will not be able to obtain any more material for several weeks due to a strike in its supplier's plant. Management is trying
to decide which product(s) to concentrate on next week in filling its backlog of orders. Direct labour costs $25 per hour.
27.00
104.00
16.00
16.00
74.30
38.00
117.30 158.00
$31.70 $ 52.00
Required:
1. Compute the amount of contribution margin that will be obtained per kilogram of material used in each product. (Do not round
intermediate calculations. Round your answers to 2 decimal places.)
Highest price
Product
B
$210.00
A
O Product A
O Product B
O Product C
$205.00
78.00
16.00
70.75
164.75
$40.25
B
2. Which orders would you recommend that the company work on next week-the orders for product A, product B or product C?
per kilogram
3. A foreign supplier could furnish Baker with additional stocks of the raw material at a substantial premium over the usual price. If
there is unfilled demand for all three products, what is the highest price that Baker Company should be willing to pay for an additional
kilogram of materials? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
C
4. Assume that direct labour becomes a constraint instead of direct materials. How will your answer to Requirement (2) above change?
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