Childress Company produces three products, K1, S5, and G9. Each product uses the

Question

Childress Company produces three products, K1, S5, and G9. Each product uses the same type of direct material. K1 uses 4.2 pounds of the material, S5 uses 3.1 pounds of the material, and G9 uses 5.7 pounds of the material. Demand for all products is strong, but only 57,800 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows. K1 S5 $164.52 $106.69 $218.12 99.00 76.00 152.00 G91 Selling price Variable costs Required: 1. Calculate the contribution margin per pound for each of the three products. (Round your answers to 2 decimal places.) Contribution margin per pound Product K1 Product S5 Product G9 Contribution margin per pound Order in which products should be produced and filled:

Explanation / Answer

Calculate contribution margin per pound :

Product K1 Product S5 Product G9 Sale price per unit 164.52 106.69 218.12 Variable cost per unit (99) (76) (152) Contribution margin per unit 65.52 30.69 66.12 Pounds per unit 4.2 3.1 5.7 Contribution margin per pound 15.60 9.90 11.60 Order in which product should be produced and filled 1 3 2

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