Question

ertmeducation.com OL Connect Our His Industrial what is BR Saved Chapter 11 Graded Homework Help 2 Benoit Company produces three products-A B, and C. Data concerning the three products follow (per unit): 6.25 points Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio Product B $$8.00 $62.60 $81.00 24.00 18.00 9.00 24.00 25.40 $32.60 $18.60 $28.35 405 304 354 02 The company estimates that it can sell 800 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,000 pounds available each month Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials? References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places) Product A Product Product Contribution margin per pound of the constraining resource Required 2 > M G IN < Prev 2 of 2 !!! Next MacBook Air 80 833 og $ 4 % 5 & 7 C 9 2 3 6 8 W E R T Y 0

Answer 1

Solution - 1. Calculation of contribution margin per sound of constraining resource for each product:- Particulars Product Products Product - Direct material Cost permit co $ 24. $18 $9 Direct material Cost per pound (b) 93 $3 Direct material pound used permit 8 pounds 6 sounds 3 pounds [Combo -A) (063 - Contribution margin Perunit (B1 332 $18.6 $28.35 Contribution margin per found 34 per 1&31 189.45 of the constrained Resource Pound perpaunds per pounds [B-A 3 20 Since we have constraint resource ; the preference Showd be given to the product by considering the contribution margin per Dount of the constrained resource. In this Cage, FIAST Preference should be given to PRODUCT-C because contribution margin per sound of constrained resource is higher in product c. gecond Preference is Product A. Third reference is product to Rank Product Product A Product -A 2 3. product ac 1 CS Scanned with CamScanner

Bo Calculation of maximum Contribution margin if the Company make optimal use of its 5000 pound of materials:- Particulars Product A Produc-B Product-c Total Maximum demand a BDD Unik 300 mmits BD mits Direct material pound required (b) 8 Pounds 6 Pounds 3 pounds per unit Total direct material pounds 6400 44800 2400 13600 require (axb] pounds Pounds Pounds Pounds Available direct material pounds Sopp pounds 0 Allocation direct materice Bund 2600 2400 as per contribution marginper pounds pounds pounds Cound TA] [600D-2100 1800 X3 *3 Lunit 5000 pounds No. of units produced 800 units 325 unit ounit 1260078 [unit Powell $9.45 Contribution margin per found & 4 3.1 03 Tovel maximum contribution & 10400 90 margin [AxB $22680 $38080 CS Scanned with CamScanner