Benoit Company produces three products—A, B, and C. Data concerning the three pr
ID: 2520801 • Letter: B
Question
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):
Product
72.00
The company estimates that it can sell 700 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 4,800 pounds available each month.
Required:
1. Calculate the contribution margin per pound of the constraining resource for each product.
3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 4,800 pounds of materials?
Product
A B C Selling price $72.00
$ 54.00 $ 62.00 Variable expenses: Direct materials 21.60 18.00 9.00 Other variable expenses 21.60 22.50 34.40 Total variable expenses 43.20 40.50 43.40 Contribution margin $ 28.80 $ 13.50 $ 18.60 Contribution margin ratio 40 % 25 % 30 %Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Product A Product B Product C Selling price 72.00 54.00 62.00 Variable expenses: Direct Materials 21.60 18.00 9.00 Other variable expenses 21.60 22.50 34.40 Total variable expenses 43.20 40.50 43.40 Contribution margin per unit 28.80 13.50 18.60 No of pounds= DMC /3 7.20 6.00 3.00 Contribution margin per pound 4.00 2.25 6.20 Ranking 2.00 3.00 1.00 Total Pound available 4,800.00 Pounds used for C =700*3 2,100.00 Remaining pounds available 2,700.00 No of units of A = 2700/7.20 375.00 3) Contribution margin of C = 700 * 18.60 13,020.00 Contribution margin of A = 375 *28.80 10,800.00 maximum contribution margin 23,820.00
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