The Benoit Company produces three products A, B and C. The per unit data is as follows:
Product
A
|
B
|
C
|
$80
|
$56
|
$70
|
24
|
15
|
09
|
24
|
27
|
40
|
48
|
42
|
49
|
Selling Price………………………………
Less: Variable Expenses
Direct Materials………………………….. Other variable expenses………………… Total variable expenses………………….
Contribution Margin per Unit……………
|
$32
|
$14
|
$21
|
Contribution margin Ratio……………….
|
40%
|
25%
|
30%
|
Demand for the company’s products is very strong, with far more orders each month than the company has raw materials available to produce. The same material is being used in each product. The material costs $3 per pound with a maximum of 5000 pounds available each month. The demand of product A, B and C is 800,700 and 600 respectively.
Required:
Compute the contribution margin per pound of direct material, which orders would you advise the company to accept first for those of product, A, B or C which combination of products A,B & C will generate the maximum contribution margin.
Extracted text: Question No.3 The Benoit Company produces three products A, B and C. The per unit data is as follows: Product A B C Selling Price. Less: Variable Expenses $80 $56 $70 Direct Materials.. 24 15 09 Other variable expenses... Total variable expenses.. 24 27 40 48 42 49 Contribution Margin per Unit.. Contribution margin Ratio.. $32 40% $14 25% $21 30% Demand for the company's products is very strong, with far more orders each month than the company has raw materials available to produce. The same material is being used in each product. The material costs $3 per pound with a maximum of 5000 pounds available each month. The demand of product A, B and C is 800,700 and 600 respectively. Required: Compute the contribution margin per pound of direct material, which orders would you advise the company to accept first for those of product, A, B or C which combination of products A,B & C will generate the maximum contribution margin.