ces Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 3.7 pounds of the material, Ike uses 3.9 pounds of the material, and Bix uses 6.7 pounds of the material. Selling price per unit and variable costs per unit of each product follow. Selling price per unit Variable costs per unit Kin $145.46 87.00 Ike $ 125.39 86.00 Bix $ 211.68 142.00 (a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in which management should produce and meet demand. Product Contribution Margin Contribution margin per unit Pounds per unit Contribution margin per pound Order in which management should produce and meet demand: Kin Ike Bix
ces Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 3.7 pounds of the material, Ike uses 3.9 pounds of the material, and Bix uses 6.7 pounds of the material. Selling price per unit and variable costs per unit of each product follow. Selling price per unit Variable costs per unit Kin $145.46 87.00 Ike $ 125.39 86.00 Bix $ 211.68 142.00 (a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in which management should produce and meet demand. Product Contribution Margin Contribution margin per unit Pounds per unit Contribution margin per pound Order in which management should produce and meet demand: Kin Ike Bix
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 3.7 pounds of the
material, Ike uses 3.9 pounds of the material, and Bix uses 6.7 pounds of the material. Selling price per unit and variable costs per unit
of each product follow.
Selling price per unit
Variable costs per unit
Kin
$145.46
87.00
Ike
$125.39
86.00
Bix
$ 211.68
142.00
(a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in
which management should produce and meet demand.
Product Contribution Margin
Contribution margin per unit
Pounds per unit
Contribution margin per pound
Order in which management should produce and meet demand:
Kin
Ike
Bix
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