price e expenses: t materials variable expenses ariable expenses ution margin ution margin ratio A $ 180 18 126 144 $36 208 Product B $ 240 72 96 168 $72 30% C $ 220 30 140 170 $ 50 23% raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will no tain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which produc te on next week in filling its backlog of orders. The material costs $6 per pound.
price e expenses: t materials variable expenses ariable expenses ution margin ution margin ratio A $ 180 18 126 144 $36 208 Product B $ 240 72 96 168 $72 30% C $ 220 30 140 170 $ 50 23% raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will no tain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which produc te on next week in filling its backlog of orders. The material costs $6 per pound.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1and 2
![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.
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 using the 5,400 pounds of raw material on hand?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3966b9a7-fe71-44cf-b953-e8752bb97164%2F1dca293d-9078-44c7-a92b-9d7affa8f736%2Ffxfkysc_processed.jpeg&w=3840&q=75)
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.
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 using the 5,400 pounds of raw material on hand?
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