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Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 54.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio $ 80.00 24.00 24.00 48.00 $ 32.00 40% $ 80.00 18.00 12.00 25.20 44.00 43.20 56.00 $ 10.80 $ 24.00 20% 30% The company estimates that it can sell 850 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 7,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 7,000 pounds of materials?

Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 54.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio $ 80.00 24.00 24.00 48.00 $ 32.00 40% $ 80.00 18.00 12.00 25.20 44.00 43.20 56.00 $ 10.80 $ 24.00 20% 30% The company estimates that it can sell 850 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 7,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 7,000 pounds of materials?

Business Its Legal Ethical & Global Environment
Business Its Legal Ethical & Global Environment
10th Edition
ISBN:9781305224414
Author:JENNINGS
Publisher:JENNINGS
Chapter17: Management Of Employee Conduct: Agency
Section17.3: The Principal–agent Relationship
Problem 2CQ
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Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? Product A Product B Product C
Transcribed Image Text:Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? Product A Product B Product C
Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 54.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio A $ 80.00 24.00 24.00 48.00 $ 32.00 40% 18.00 25.20 43.20 $ 10.80 20% C $ 80.00 12.00 44.00 56.00 $ 24.00 Contribution margin per pound of the constraining resource 30% The company estimates that it can sell 850 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 7,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 7,000 pounds of materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places.) Product A Product B Product C
Transcribed Image Text:Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 54.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio A $ 80.00 24.00 24.00 48.00 $ 32.00 40% 18.00 25.20 43.20 $ 10.80 20% C $ 80.00 12.00 44.00 56.00 $ 24.00 Contribution margin per pound of the constraining resource 30% The company estimates that it can sell 850 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 7,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 7,000 pounds of materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places.) Product A Product B Product C
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