Shelby Company produces three products: product X, product Y, and product Z. Dat

Question

Shelby Company produces three products: product X, product Y, and product Z. Data concerning the three products follow (per unit):

Demand for the company’s products is very strong, with far more orders each month than the company can produce with the available raw materials. The same material is used in each product. The material costs $5 per pound, with a maximum of 4,800 pounds available each month.

Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Product X Product Y Product Z Selling price $ 60 $ 40 $ 50 Variable expenses: Direct materials 18.00 12.00 3.50 Labor and overhead 18.00 18.00 31.50 Total variable expenses 36.00 30.00 35.00 Contribution margin $ 24.00 $ 10.00 $ 15.00 Contribution margin ratio 40 % 25 % 30 %

Explanation / Answer

Hi,

Please find the answer as follows:

Thanks.

X Y Z Direct Material Cost 18 12 3.5 Cost per pound 5 5 5 Direct material pounds per unit 3.6 2.4 0.7 Contribution margin 24 10 15 Contribution margin per pound 6.67 4.17 21.43

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