Benoit Company produces three products, D, E, and F. Cost and revenue characteristics of the three products follow (per unit):
Product D E F
Selling price $46 $41 $40
Less variable expenses:
Direct materials 18 12 9
Labor and overhead 13 9 19
Total variable expenses 31 21 28
Contribution margin $15 $20 $12
Demand for the company’s products is very strong, with far more orders on hand each month than the company has raw materials available to produce. The same material is used in each product. The material costs $3 per pound, with a limited number of pounds available each month. In what order should the company fill the demand for the three products?
- D,E,F
- E.D.F
- F,D,E
- E,F,D
Benoit Company produces three products, D, E, and F. Cost and revenue characteristics of the three products follow (per unit):
Product D E F
Selling price $46 $41 $40
Less variable expenses:
Direct materials 18 12 9
Labor and overhead 13 9 19
Total variable expenses 31 21 28
Contribution margin $15 $20 $12
Demand for the company’s products is very strong, with far more orders on hand each month than the company has raw materials available to produce. The same material is used in each product. The material costs $3 per pound, with a limited number of pounds available each month. In what order should the company fill the demand for the three products?
- D,E,F
- E.D.F
- F,D,E
- E,F,D
Related questions
Benoit Company produces three products, A, B, and C. Dataconcerning the three products follow (per unit):
Product | |||||||||||||||||||||||||||||||||||||
| A | B | C | |||||||||||||||||||||||||||||||||||
| Selling price | $ | 120 | $ | 100 | $ | 110 | |||||||||||||||||||||||||||||||
| Variableexpenses: | |||||||||||||||||||||||||||||||||||||
| Direct materials | 36.00 | 30.00 | 7.70 | ||||||||||||||||||||||||||||||||||
| Other variable expenses | 36.00 | 45.00 | 69.30 | ||||||||||||||||||||||||||||||||||
| Total variableexpenses | 72.00 | 75.00 | 77.00 | ||||||||||||||||||||||||||||||||||
| Contributionmargin | $ | 48.00 | $ | 25.00 | $ | 33.00 | |||||||||||||||||||||||||||||||
| Contribution marginratio | 40 | % | 25 | % | 30 | % | |||||||||||||||||||||||||||||||
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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 | $ | 270 | $ | 360 | $ | 340 | |||||
| Variable expenses: | |||||||||||
| Direct materials | 36 | 72 | 42 | ||||||||
| Other variable expenses | 126 | 108 | 179 | ||||||||
| Total variable expenses | 162 | 180 | 221 | ||||||||
| Contribution margin | $ | 108 | $ | 180 | $ | 119 | |||||
| Contribution margin ratio | 40 | % | 50 | % | 35 | % | |||||
| The same raw material is used in all three products. Barlow Company has only 4,200 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 supplierâs plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $6 per pound. |
| Required: |
| 1. | Compute the amount of contribution margin that will be obtained per pound of material used in each product. | ||||||||||||||||||||||||
|
| 2a. | Compute the amount of contribution margin on each product
|
| 2b. | Which orders would you recommend that the company work on next weekâthe orders for product A, product B, or product C? | |||||||||||
|
Barlow Company manufactures three products: A, B, and C. Theselling price, variable costs, and contribution margin for one unitof each product follow:
| Product | |||||||||||
| A | B | C | |||||||||
| Selling price | $ | 210 | $ | 330 | $ | 320 | |||||
| Variable expenses: | |||||||||||
| Direct materials | 21 | 63 | 28 | ||||||||
| Other variable expenses | 147 | 168 | 244 | ||||||||
| Total variable expenses | 168 | 231 | 272 | ||||||||
| Contribution margin | $ | 42 | $ | 99 | $ | 48 | |||||
| Contribution margin ratio | 20 | % | 30 | % | 15 | % | |||||
The same raw material is used in all three products. BarlowCompany has only 5,200 pounds of raw material on hand and will notbe able to obtain any more of it for several weeks due to a strikein its supplierâs plant. Management is trying to decide whichproduct(s) to concentrate on next week in filling its backlog oforders. The material costs $7 per pound.
Required:
1. Compute the amount of contribution margin that will beobtained per pound of material used in each product.
|
2a. Compute the amount of contribution margin on eachproduct.
| A | B | C | |
| Contribution Margin per pound | _______ | _______ | ______ |
| Pounds of material available | |||
| Total Contribution Margin |
2b. Which orders would you recommend that the company work onnext weekâthe orders for product A, product B, or product C?
| Product A | |
| Product B | |
| Product C |
3. A foreign supplier could furnish Barlow with additionalstocks of the raw material at a substantial premium over the usualprice. If there is unfilled demand for all three products, what isthe highest price that Barlow Company should be willing to pay foran additional pound of materials?
|
