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

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 $3 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

a.

b.

Orders to accept first = Order for Product C
Orders to accept second = Order for Product A
Orders to accept third = Order for Product B

Product A B C Contribution Margin $40.00 $20.00 $27.00 Direct material requirement (in pounds) 10 8 2.1 Contribution margin per pound of material used $4 $2.5 $12.86

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