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

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 $8 per pound with a maximum of 4,500 pounds available each month.

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

                 Contributed margin per pound

Product A

Product B

Product C

Product

A B C   Selling price $ 80 $ 60 $ 70   Variable expenses:       Direct materials 24.00 18.00 4.90       Other variable expenses 24.00 27.00 44.10   Total variable expenses 48.00 45.00 49.00   Contribution margin $ 32.00 $ 15.00 $ 21.00   Contribution margin ratio 40 % 25 % 30 %

Explanation / Answer

(a)

A B C Material cost per unit 24 18 4.90 Material cost per pound 8 8 8 No. of pounds per unit (A) 3 2.25 0.6125 Contribution per unit (B) 32 15 21 Contribution per pound of material (B/A) 10.67 6.67 34.29

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