Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 52.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio A $90.00 Required 1 27.00 27.00 54.00 $36.00 Required 2 Required 3 40% 15.00 24.00 39.00 $ 13.00 25% C $ 80.00 The company estimates that it can sell 800 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 5,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials? $ 32,800 X 12.00 40.00 52.00 $28.00 35% Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials? Note: Round your intermediate calculations to 2 decimal places. Maximum contribution margin
Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product B $ 52.00 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio A $90.00 Required 1 27.00 27.00 54.00 $36.00 Required 2 Required 3 40% 15.00 24.00 39.00 $ 13.00 25% C $ 80.00 The company estimates that it can sell 800 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 5,000 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials? $ 32,800 X 12.00 40.00 52.00 $28.00 35% Complete this question by entering your answers in the tabs below. Answer is complete but not entirely correct. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of materials? Note: Round your intermediate calculations to 2 decimal places. Maximum contribution margin
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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Transcribed Image Text:Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit):
Product
B
$ 52.00
Selling price
Variable expenses:
Direct materials
Other variable expenses
Total variable expenses
Contribution margin
Contribution margin ratio
A
$90.00
Required 1
27.00
27.00
54.00
$36.00
Required 2 Required 3
40%
15.00
24.00
39.00
$ 13.00
25%
C
$ 80.00
The company estimates that it can sell 800 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 5,000 pounds available each month.
Required:
1. Calculate the contribution margin per pound of the constraining resource for each product.
2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third?
3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds of
materials?
$ 32,800 X
12.00
40.00
52.00
$28.00
35%
Complete this question by entering your answers in the tabs below.
Answer is complete but not entirely correct.
What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,000 pounds
of materials?
Note: Round your intermediate calculations to 2 decimal places.
Maximum contribution margin
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