Benoit Company produces three products, A, B, and C. Data concerning the three p
ID: 2476559 • Letter: B
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 $7 per pound with a maximum of 5,500 pounds available each month.
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?
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit):
Explanation / Answer
Particluars
A
B
C
Selling Price
95
75
85
Less: Variable Cost
Direct Material
28.5
22.5
5.95
Other Variable Expenses
28.5
33.75
53.55
Total Variable Cost per unit
57
56.25
59.5
Contribution per Unit
38
18.75
25.5
Cost Of Raw Material Per pound
7
7
7
No of pouds Raw Material used per unit
4.07
3.21
0.85
Contribution per pound
9.33
5.83
30.00
Rank
II
III
I
b. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third
First C ,then A, and then B-------------àCAB
Particluars
A
B
C
Selling Price
95
75
85
Less: Variable Cost
Direct Material
28.5
22.5
5.95
Other Variable Expenses
28.5
33.75
53.55
Total Variable Cost per unit
57
56.25
59.5
Contribution per Unit
38
18.75
25.5
Cost Of Raw Material Per pound
7
7
7
No of pouds Raw Material used per unit
4.07
3.21
0.85
Contribution per pound
9.33
5.83
30.00
Rank
II
III
I
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