ling price -iable expenses: irect materials ther variable expenses al variable expenses tribution margin tribution margin ratio A $ 180 18 126 144 $36 20% Product B $ 240 72 96 168 $72 30% с $ 220 30 140 170 $ 50 23% ame raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will no- o obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which produc entrate on next week in filling its backlog of orders. The material costs $6 per pound.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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3 and 4?
3. Assuming that Barlow's estimated customer demand is 600 units per product line, what is the maximum contribution margin the
company can earn when using the 5,400 pounds of raw material on hand?
4. A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price.
Assuming Barlow's estimated customer demand is 600 units per product line and that the company has used its 5,400 pounds of raw
material in an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materials?
Complete this question by entering your answers in the tabs below.
Transcribed Image Text:3. Assuming that Barlow's estimated customer demand is 600 units per product line, what is the maximum contribution margin the company can earn when using the 5,400 pounds of raw material on hand? 4. A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow's estimated customer demand is 600 units per product line and that the company has used its 5,400 pounds of raw material in an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materials? Complete this question by entering your answers in the tabs below.
Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of
each product follow:
Selling price
Variable expenses:
Direct materials
Other variable expenses
Total variable expenses
Contribution margin
Contribution margin ratio
A
$ 180
18
126
144
$ 36
20%
Product
B
$ 240
72
96
168
$ 72
30%
C
$ 220
30
140
170
$ 50
23%
The same raw material is used in all three products. Barlow Company has only 5,400 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 $6 per pound.
Transcribed Image Text:Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio A $ 180 18 126 144 $ 36 20% Product B $ 240 72 96 168 $ 72 30% C $ 220 30 140 170 $ 50 23% The same raw material is used in all three products. Barlow Company has only 5,400 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 $6 per pound.
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