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%u2019s 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 $4 per pound, with a maximum of 4,400 pounds available each month.

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

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

Explanation / Answer

Cost per pound Direct material pounds per unit Contribution margin per pound
X Y Z Direct Material Cost 28.5 22.5 5.95 Cost per pound 4 4 4 Direct material pounds per unit 28.5/4
=7.125 22.5/4
=5.625 5.95/4
=1.4875 Contribution margin 38 18.75 25.5 Contribution margin per pound 38/7.125
=5.33 18.75/5.625
=3.33 25.5/1.4875
=17.14

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