Solution 1:
Computation of contribution margin per pound - Barlow company | |||
Particulars | Product A | Product B | Product C |
Contribution margin per unit | $36.00 | $72.00 | $36.00 |
Raw material required per unit (In pound) | 2 | 8 | 3 |
Contribution margin per pound of material | $18.00 | $9.00 | $12.00 |
Rank | 1 | 3 | 2 |
Solution 2:
As demand of each product is unlimited therefore entire material will be used in production of Product A.
Nos of units to be produced for Product A =5400 / 2= 2700 units
Maximum contribution margin = 2700 * $36 = $97,200
Solution 3:
If maximum demand of product is 600 units then optimal use of material to earn maximum contribution margin
Product A = 600 units *2 = 1200 Pounds
Product C = 600*3 = 1800 Pounds
Product B = 300*8 = 2400 Pounds
Maximum contribution margin that company can earn = (600*$36) + (600*$36) + (300*$72)
= $64,800
Solution 4:
Additional pound of material will be utilized to Produce product B.
Therefore the highest price that Barlow company is willing to pay for additional pound of material = Regular price + Contribution margin per pound of product B
= $9 + $9 = $18 per pound
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Required 1 Required 2 Required 3 Required 4 Barlow...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: A $ 180 Product B $ 300 C $ 240 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin 18 126 144 90 120 210 $ 90 30% 36 20% 177 204 $ 36 15% Contribution margin ratio The same raw material is used in...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures th ree products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A В C Selling price Variable expenses: Direct materials Other variable expenses $180 $270 $240 24 80 32 90 148 170 180 102 Total variable expenses 126 $ 54 $100 60 Contribution margin 30% 378 25% Contribution margin ratio The same raw material is used in all three...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] 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 A B C Selling price $ 160 $ 270 $ 210 Variable expenses: Direct materials 16 80 24 Other variable expenses 108 90 144 Total variable expenses 124 170 168 Contribution margin $ 36 $ 100 $ 42 Contribution margin ratio 23 % 37 % 20 % The same...
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 AB $180 $240 $240 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 18 126 144 $ 36 20% 72 96 168 $ 72 30% 27 177 204 $ 36 15% The same raw material is used in all three products. Barlow Company has only 5,400 pounds of...
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 B $ 240 $ 180 $ 220 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 18 126 144 72 96 168 30 140 170 $ 50 $ 36 $ 72 208 30% 238 The same raw material is used in all three products. Barlow Company has only...
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 A В $180 $240 $240 Selling price Variable expenses: Direct materials 18 72 27 Other variable expenses Total variable expenses 126 96 177 144 168 204 36 72 36 Contribution margin Contribution margin ratio 20% 30% 15% The same raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material...
Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product followThe same raw material is used in all three products. Barlow Company has only 5,400 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 product(s) to concentrate on next week in filling its...
Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: The same raw material is used in all three products. Barlow Company has only 5,400 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 product(s) to concentrate on next week in filling its...
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 $150 $240 S2ee Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin 128 120 $ 30 129 168 Contribution margin ratio 20% The same raw material is used in all three products. Barlow Company has only 5.400 pounds of raw material on hand and will not be able to obtain any...
Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: A Product B $ 240 $ 180 $ 220 18 72 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 126 144 $ 36 20% 168 $ 72 30% 30 140 170 $ 50 238 The same raw material is used in all three products. Barlow Company has only...