Westburne Company produces three products: Alpha, Omega, and Beta. Data (per unit) concerning the three products follow: Selling price Less variable expenses: Direct materials Labour and overhead Total variable expenses Contribution margin Contribution margin ratio Alpha $160 48 48 96 $ 64 40% Omega $112 30 54 84 $28 25% Beta $140 18 80 98 $42 Required: Which orders would you advise the company to accept first, those for Alpha, Omega, or Beta? Which orders second? Third? 30% Demand for the company's products is very strong, with far more orders each month than the company can produce with the available raw materials. The same material is used in each product. The material costs $6 per kilogram, with a maximum of 10,000 kilograms available each month.
Westburne Company produces three products: Alpha, Omega, and Beta. Data (per unit) concerning the three products follow: Selling price Less variable expenses: Direct materials Labour and overhead Total variable expenses Contribution margin Contribution margin ratio Alpha $160 48 48 96 $ 64 40% Omega $112 30 54 84 $28 25% Beta $140 18 80 98 $42 Required: Which orders would you advise the company to accept first, those for Alpha, Omega, or Beta? Which orders second? Third? 30% Demand for the company's products is very strong, with far more orders each month than the company can produce with the available raw materials. The same material is used in each product. The material costs $6 per kilogram, with a maximum of 10,000 kilograms available each month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Westburne Company produces three products: Alpha, Omega, and Beta. Data (per unit) concerning the three products follow:
Selling price
Less variable expenses:
Direct materials
Labour and overhead
Total variable expenses
Contribution margin
Contribution margin ratio
Alpha
$160
48
48
96
$ 64
40%
Omega
$112
30
54
84
$28
25%
Beta
$140
18
80
98
$42
30%
Demand for the company's products is very strong, with far more orders each month than the company can produce with the available
raw materials. The same material is used in each product. The material costs $6 per kilogram, with a maximum of 10,000 kilograms
available each month.
Required:
Which orders would you advise the company to accept first, those for Alpha, Omega, or Beta? Which orders second? Third?
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