Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4.4 pounds of the material, Ike uses 2.8 pounds of the material, and Bix uses 6.9 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 $ 171.32 104.00 Contribution margin per pound Ike $111.80 88.00 (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. Bix $ 217.14 144.00 Product Contribution Margin Order in which management should produce and meet demand: Kin Ike Bix
Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4.4 pounds of the material, Ike uses 2.8 pounds of the material, and Bix uses 6.9 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 $ 171.32 104.00 Contribution margin per pound Ike $111.80 88.00 (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. Bix $ 217.14 144.00 Product Contribution Margin 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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Transcribed Image Text:Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4.4 pounds of the
material, Ike uses 2.8 pounds of the material, and Bix uses 6.9 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.
xin
Ike
Bix
$ 171.32 $ 111.80 $ 217.14
104.00
88.00
144.00
(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.
Contribution margin per pound
Product Contribution Margin
Order in which management should produce and meet demand:
Kin
Ike
Bix
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