Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to thos products: Product A Product B Product C Selling price $ 70 $ 75 $ 85 Variable costs per unit: Direct materials 16 24 20 Direct labor Variable overhead Total variable cost per unit Contribution margin per unit 40 28 32 2 2 3 58 54 55 $ 12 $ 21 $ 30 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per bound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,40 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials?

Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to thos products: Product A Product B Product C Selling price $ 70 $ 75 $ 85 Variable costs per unit: Direct materials 16 24 20 Direct labor Variable overhead Total variable cost per unit Contribution margin per unit 40 28 32 2 2 3 58 54 55 $ 12 $ 21 $ 30 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per bound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,40 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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