ANSWER:
(A)
For a particular product:
Contribution margin per pound of material used = contribution margin/pounds of material used
And,
Pounds of material used = total direct material cost/cost per direct material unit (pound)
Therefore,
For product A,
Pounds of material used = $31.50/$4 = 7.875
Contribution margin per pound of material used = $42/7.875
= $5.33
And
For product B,
Pounds of material used = $25.50/$4 = 6.375
Contribution margin per pound of material used = $21.25/6.375
= $3.33
And
For product C,
Pounds of material used = $6.65/$4 = 1.6625
Contribution margin per pound of material used = $28.50/1.6625
= $17.14
(B)
Based on the contribution margin per pound of material used as computed above:
Product | preference |
---|---|
Product A | second |
Product B | third |
Product C | first |
Benoit Company produces three products, A, B, and C. Data concening the three products follow (per...
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