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 Selling price $ 60 $ 40 $ 50 Variable expenses Direct materials 18.00 12.00 3.50 Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 18.00 36.00 $24.00 18.00 30.00 $10.00 31.50 35.00 $15.00 WY 25% 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 wi th a maximum of 4,900 pounds available each month

Explanation / Answer

Calculate contribution margin per pound :

so in 4900 pound we should prepare product C (4900/1.16)=4200 unit and highest contribution (4200*15) = 63000

Product A Product B Product C Contribution margin per unit 24 10 15 Pound per unit 18/3=6 12/3=4 3.5/3=1.16 Contribution margin per pound 4 2.5 12.86 Rank II III I

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