Barlow Company manufactures three products: A, B, and C. The selling price, vari

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: The same raw material is used in all three products Barlow Company has only 7,000 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 backlog of orders The material costs $4 per pound. Compute the amount of contribution margin that will be obtained per pound of material used in each product. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

Cont Margin per pound = COnt Margin per prod/Qty of DM used Prod A : CM per Lb = $62/($24/$4) = $62/6 = $10.33 Prod B : CM per Lb = $98/($88/$4) = $98/22 = $ 4.45 Prod C: CM per Lb = $108/($16/$4) = $108/4 = $27 So Highest Cont Margin per Lb is for Prod C fllowed by A & B.

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