Question

Chew Benoit Company produces the products, A, B, and C. Data concerning the three products follow (per unit) Product A c Selling price $ 110 $0 $100 Variable expenses Direct materiale 33.00 27.00 700 Other variable expenses 33.00 40 50 63.00 Total variable expenses 66.00 67.50 70 00 Contribution margin 44.00 $22.50 Contribution margin to 40% 30% Demand for the company's products is very strong with or more orders each more than the company can produce wen he was raw materials. The same materials used in each product. The material cours $3 per pound with a maximum of 5.700 pounds available each month Required: 1. 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 Products Product 2. Which orders would you advise the company to accept for those for A. for B, or for c? Which orders second? Third? Product A Products Product

Answer 1

Solution:

	Contribution margin per unit
Product A	4
Produc B	2.5
Product C	12.88

Product A	Second
Produc B	Third
Product C	First

Explanation:

1.

		Product A	Product B	Product C
1	Direct materials required per unit	33	27	7
2	Cost per pound	3	3	3
3	Pounds required per unit(1/2)	11	9	2.33
4	Contribution margin per unit	44	22.5	30
5	Contribution margin per pound of Materials used (4/3)	4	2.5	12.88