Saved Benoit Company produces three products-A B, and C. Data concerning the thr

Question

Saved Benoit Company produces three products-A B, and C. Data concerning the three products follow (per unit: Selling price Variable expenses 80.00 954.00 80.00 Direct materials 24.00 18.00 12.00 othe? variable expenses 24.00 25.20 44.00 total variable expenses.00 3.20 56.00 Contribution margin margin 32.000 $32.00 10.80 $24.00 Contributiba margin ratio? 40, The company estimates that it can sell 850 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 7,000 pounds available each month. Required: Calculete the contribution margin per pound of the constraining resource for each product. 2. which orders would you advise the company to accept first, those for A 8, or C? which orders second? Third? 3. What is the maximum contribution margin that the compeny can earn per month if it makes optimal use of its 7000 pounds of materials? Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Calculete the centribution margin per pound of the constraining resource for esch product. (Round your answers to 2 Prey11 of 12 Next

Explanation / Answer

Solution

1) Contribution per pound of constraining resource

2) Ranking of Product for production (It will as per highest to lowest contribution margin per pound of constraining resource)

Rank 1 - Product C

Rank 2 - Product A

Rank 3 - Product B

3) Maximum Contribution Margin

Production - Product C

Material required = 850 units * 4 pound per unit = 3400 Pound

Remaining Pound = (7000 - 3400) = 3600 Pound

Production - Product A

Units to be produced = 3600 pound/8 pound per unit = 450 Units

Contribution Margin

Particulars Product A Product B Product C Direct Material per unit (A) $24 $18 $12 Material cost per pound (B) $3 $3 $3 Pound Required Per unit (A/B) 8 6 4 Contribution Margin $32 $10 $24 Contribution Margin per pound of constraining resource $4 1.67 $6

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