Question

Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product $280 $400 $360 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin 14 56 21 154 144 213 168200234 $ 112 S20D $126 40% 50% 35% Contribution margin ratio The same raw material is used in all three products. Barlow Company has only 4,300 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which products) to concentrate on next week in filling is backlog of orders. The material costs $7 per pound. Required: 1. Compute the amount of contribution margin that will be obtained per pound of material used in each product. Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. А в с Contribution margin per pound Pounds of material available Total contribution margin

Answer 1

Answers C 126 21 Contribution Margin per Unit Direct Materila cost Per unit Direct Materila Cost per pound Pounds Direct Materila Required Contiribution Margin per Pound A B 112 200 1456 7 7 8 56 25 21 42 А в C Contiribution Margin per Pound 56 25 42 Pounds of Material Available 4300 4300 4300 Total contribution Margin 240800 107500 180600 Which Orders Would you recommend Prodcut A If there is unfilled demand for all three products What is the Highest price willing to Pay Maximum amount 63 Per Pound Maximum amount = 7+CM per pound of A = 7+56 =63