Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 3.1 pounds of thematerial, Ike uses 2.7 pounds of the material, and Bix uses 5.3 pounds of the material. Selling price per unit and variable costs per unitof each product follow.Selling price per unitVariable costs per unitKin$ 136.6788.00Contribution margin per poundIke$ 108.0384.00(a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order inwhich management should produce and meet demand.Bix$ 204.01142.00Product Contribution MarginOrder in which management should produce and meet demand:KinIkeBix

The contribution margin is calculated as difference between revenue and variable costs. The product…

Answered: Chip Company produces three products,…

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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Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C $ 240 Selling price Variable expenses: $160 $ 270 Direct materials 16 80 32 Other variable expenses 108 90 148 Total variable expenses 124 170 180 Contribution margin $ 36 $ 100 $ 60 Contribution margin ratio 23% 37% 25% The same raw material is used in all three products. Barlow Company has only 6,000 pounds of raw material on hand and will not be able to obtain any more of it 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. The material costs $8 per pound. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Assuming that Barlow has unlimited demand for each of its three products, what is the maximum contribution margin the company can earn when…
Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 62.00 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 Required 1 Required 2 40% Required 3 18.00 25.40 43.40 $18.60 30% с $81.00 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. 9.00 43.65 52.65 $28.35 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? 35% Complete this question by…
Subject: acounting
Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 3.4 pounds of the material, Ike uses 2.3 pounds of the material, and Bix uses 5.8 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 $ 157.02 105.00 Ike $ 105.16 84.00 Вix $ 219.18 149.00 (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 Kin Ike Bix Contribution margin per pound Order in which management should produce and meet demand:
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Manatoah Manufacturing produces 3 models of window air conditioners: model 101, model 201, and model 301. The sales price and variable costs for these three models are as follows: Sales Price Variable Cost per Unit Product per Unit $275 350 395 Model 101 Model 201 Model 301 The current product mix is 4:3:2. The three models share total fixed costs of $657,000. $180 215 240 A. Calculate the sales price per composite unit. Sales price $ B. What is the contribution margin per composite unit? Contribution margin $ per composite unit Break-even point in dollars $ Break-even point in units per composite unit. C. Calculate Manatoah's break-even point in both dollars and units. units
Barlow Company manufactures three products—A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C Selling price $ 160 $ 270 $ 210 Variable expenses: Direct materials 16 80 24 Other variable expenses 108 90 144 Total variable expenses 124 170 168 Contribution margin $ 36 $ 100 $ 42 Contribution margin ratio 23 % 37 % 20 % The same raw material is used in all three products. Barlow Company has only 5,700 pounds of raw material on hand and will not be able to obtain any more of it 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. The material costs $8 per pound. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product.…
Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4 pounds of the material, Ike uses 3 pounds of the material, and Bix uses 6 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 $ 160 96 Contribution margin per pound Ike $ 112 85 Bix $ 210 144 (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 Order in which management should produce and meet demand: Kin Ike Bix
Redhead Equipment Inc. manufactures three products. Information about the selling prices and unit costs for the three products is below: Product A Selling price $90.00 $60.00 $110.00 Variable costs $52.00 $24.00 $63.00 Fixed costs $22.00 $8.00 $25.00 Compression machine time 11 min. 6 min. 13 min. Fixed costs are applied based on direct labour hours. Demand for the three products exceeds the company's current production capacity. The compression machine is the constraint, with just 2,500 minutes of compression machine time available this week. Required: a. Given the compression machine constraint, which product should be emphasized? Be sure to show your calculations to support your recommendation Activa Go to P
Sunland Inc. produces three separate products from a common process costing $100,100. Each of the products can be sold at the split- off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period. Product 10 Product 12 Product 14 (c) Product Your answer is partially correct. Product 10 Product 12 Product 14 $ Sales Value at Split-Off Point $59,700 $ 15,800 $ 55,400 Calculate incremental profit/(loss) and determine which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Incremental profit (loss) Cost to Process Further eTextbook and Media $100,100 30,800 149,700 Sales Value after Further Processing $191,000 34,700 Decision 214,000 Should be processed further Should be sold at the split-off point Should be processed further Assistance Used

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