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 A B C Selling price $ 65 $ 45 $ 55 Variable expenses: Direct materials 19.50 13.50 3.85 Other variable expenses 19.50 20.25 34.65 Total variable expenses 39.00 33.75 38.50 Contribution margin $ 26.00 $ 11.25 $ 16.50 Contribution margin ratio 40 % 25 % 30 % 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 $6 per pound with a maximum of 5,600 pounds available each month. Required: a. Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.)

Explanation / Answer

If 5600 pounds material used for production of A Particulars Per Unit $ Amount $ Sales (5600/(19.5/6)) = 1723 units 65        1,11,995 Direct Materials 19.5            33,599 Other variable expenses 19.5            33,599 Contribution margin 26            44,798 Contribution margin ratio 40% If 5600 pounds material used for production of B Particulars Per Unit $ Amount $ Sales (5600/(13.5/6)) = 2489 units 45        1,12,005 Direct Materials 13.5            33,602 Other variable expenses 20.25            50,402 Contribution margin 11.25            28,001 Contribution margin ratio 25% If 5600 pounds material used for production of C Particulars Per Unit $ Amount $ Sales (5600/(3.85/6)) = 8727 units 55        4,79,985 Direct Materials 3.85            33,599 Other variable expenses 34.65        3,02,391 Contribution margin 16.5        1,43,996 Contribution margin ratio 30%

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.