Benoit Company produces three products, A, B, and C. Data concerning the three p

Question

Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit):

Product

Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.)

Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?

Product

A B C   Selling price $ 120 $ 100 $ 110   Variable expenses:       Direct materials 36.00 30.00 7.70       Other variable expenses 36.00 45.00 69.30   Total variable expenses 72.00 75.00 77.00   Contribution margin $ 48.00 $ 25.00 $ 33.00   Contribution margin ratio 40 % 25 % 30 % Required: a.

Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.)

Contribution Margin per Pound Product A Product B Product C b.

Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?

Product A Product B Product C

Explanation / Answer

Maximum contribution per pound of direct material is of Product A so it should be produced first,

Second should be Product C

Third should be Product B

Contribution Margin Per Pound of Materials Used Product A Contribution Margin/Direct Material in pounds 48/36 1.33 Product B 25/36 0.69 Product C 33/36 0.92

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