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): 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 $4 per pound with a maximum of 5,200 pounds available each month. Required: 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?

Explanation / Answer

Statement showing computations Particulars Product A Product B Product C Selling Price                        55.00                      35.00              45.00 Variable Expense                        33.00                      26.25              31.50 Contibution Margin                        22.00                        8.75              13.50 Direct Materials                        16.50                      10.50                 3.15 Cost per pound                          4.00                        4.00                 4.00 Pound Used                          4.13                        2.63                 0.79 a) Contribution Margin per pound =Cont/Pound                          5.33                        3.33              17.14 b) Ranking                          2.00                        3.00                 1.00

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