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The same raw material is used in all three products. Barlow Company has only 4,600 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 tryin to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $6 per pound. Required: 1. Compute the amount of contribution margin that will be obtained per pound of material used in each product. B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. A B Contribution margin per pound Pounds of material available Total contribution margin 2b. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product A O Product B O Product C

The same raw material is used in all three products. Barlow Company has only 4,600 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 tryin to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $6 per pound. Required: 1. Compute the amount of contribution margin that will be obtained per pound of material used in each product. B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. A B Contribution margin per pound Pounds of material available Total contribution margin 2b. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product A O Product B O Product C

FINANCIAL ACCOUNTING
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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The same raw material is used in all three products. Barlow Company has only 4,600 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. Compute the amount of contribution margin that will be obtained per pound of material used in each product. A B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. A B Contribution margin per pound Pounds of material available Total contribution margin 2b. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product A O Product B O Product C
Transcribed Image Text:The same raw material is used in all three products. Barlow Company has only 4,600 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. Compute the amount of contribution margin that will be obtained per pound of material used in each product. A B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. A B Contribution margin per pound Pounds of material available Total contribution margin 2b. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product A O Product B O Product C
Exercise 7-8 Utilization of a Constrained Resource [LO7-5, L07-6] 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 В C $300 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses $440 $360 30 66 36 150 154 198 180 220 234 Contribution margin $120 $220 $126 Contribution margin ratio 40% 50% 35% The same raw material is used in all three products. Barlow Company has only 4,600 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. Compute the amount of contribution margin that will be obtained per pound of material used in each product. A B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound
Transcribed Image Text:Exercise 7-8 Utilization of a Constrained Resource [LO7-5, L07-6] 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 В C $300 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses $440 $360 30 66 36 150 154 198 180 220 234 Contribution margin $120 $220 $126 Contribution margin ratio 40% 50% 35% The same raw material is used in all three products. Barlow Company has only 4,600 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. Compute the amount of contribution margin that will be obtained per pound of material used in each product. A B Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound
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