Exercise 12-12 Volume Trade-Off Decisions [L012-5] Benoit Company produces three
ID: 2521299 • Letter: E
Question
Exercise 12-12 Volume Trade-Off Decisions [L012-5] Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product A. $90.00 557.00 $80.00 8.00 -2190 48.00 Selling price Variable expenses: 28.80 18.00 21.90 Direct materials Other variable Total variable expenses Contribution margin Contribution margin ratio e expenses 28.80 21 57.60 39.90 300 995356.00 $32.40 $17.10 $24.00 368 30% 303 The company estimates that it can sell 900 units of each product per month. The same raw material is used in each product. The material costs $4 per pound with a maximum of 5,400 pounds available each month Required 1. Calculate 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, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,400 pounds of materials? Complete this question by entering your answers in the tabs below Required 1Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places.) ProductA Product B Product C Contribution margin per pound of the constraining resource Required 1 Required 2Explanation / Answer
Contribution margin per pound :
b) Rank :
c) Product c Consumes = (900*2) = 1800 pounds
Product A Consums = (5400-1800)/7.2 = 500 units
Maximum contribution margin = (900*24+500*32.40) = 37800
Product A Product B Product C Contribution margin per unit 32.40 17.10 24.00 Pound per unit 7.2 4.5 2 Contribution margin per pound 4.5 3.8 12Related Questions
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