Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit): ProductABCSelling price$ 80$ 56$ 70Variable expenses: Direct materials241590ther variable expenses242740Total variable expenses484249Contribution margin$ 32$ 14$ 21Contribution margin ratio40 % 25% 30% The company estimates that it can sell 800 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,000 pounds available each month. Required:1. Calculate the contribution margin per pound of the constraining resource for each product.2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third?3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials?
Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit): ProductABCSelling price$ 80$ 56$ 70Variable expenses: Direct materials241590ther variable expenses242740Total variable expenses484249Contribution margin$ 32$ 14$ 21Contribution margin ratio40 % 25% 30% The company estimates that it can sell 800 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 5,000 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 5,000 pounds of materials?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 12EB: Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes...
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