Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Product Selling price 70 2$ 50 60 Variable expenses: Direct materials 21.00 15.00 4.20 Other variable 21.00 22.50 37.80 expenses Total variable 42.00 37.50 42.00 expenses Contribution margin $28.00 $ 12.50 $ 18.00 Contribution margin ratio 40% 25% 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 $6 per pound with a maximum of 4,000 pounds available each month. %24 Required: a. Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.) Contribution Margin per Pound Product A Product B Product C b. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third? Product A Product B Product C
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Product Selling price 70 2$ 50 60 Variable expenses: Direct materials 21.00 15.00 4.20 Other variable 21.00 22.50 37.80 expenses Total variable 42.00 37.50 42.00 expenses Contribution margin $28.00 $ 12.50 $ 18.00 Contribution margin ratio 40% 25% 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 pound with a maximum of 4,000 pounds available each month. %24 Required: a. Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.) Contribution Margin per Pound Product A Product B Product C b. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third? Product A Product B Product C
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 12.16E: Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that...
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