Computation of contribution margin per pound Particulars Alpha Beta Selling price per unit $120.00 $80.00 Variable cost per unit: Direct material $30.00 $12.00 Direct labor $20.00 $15.00 Variable manufacturing overhead $7.00 $5.00 Variable selling expenses $12.00 $8.00 Contribution margin per unit $51.00 $40.00 Raw material required per unit (In pound) (Direct materials/ $6) 5 2 Contribution margin per pound of material $10.20 $20.00 Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits?
Computation of contribution margin per pound Particulars Alpha Beta Selling price per unit $120.00 $80.00 Variable cost per unit: Direct material $30.00 $12.00 Direct labor $20.00 $15.00 Variable manufacturing overhead $7.00 $5.00 Variable selling expenses $12.00 $8.00 Contribution margin per unit $51.00 $40.00 Raw material required per unit (In pound) (Direct materials/ $6) 5 2 Contribution margin per pound of material $10.20 $20.00 Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
| Computation of contribution margin per pound | ||
| Particulars | Alpha | Beta |
| Selling price per unit | $120.00 | $80.00 |
| Variable cost per unit: | ||
| Direct material | $30.00 | $12.00 |
| Direct labor | $20.00 | $15.00 |
| Variable manufacturing |
$7.00 | $5.00 |
| Variable selling expenses | $12.00 | $8.00 |
| Contribution margin per unit | $51.00 | $40.00 |
| Raw material required per unit (In pound) (Direct materials/ $6) | 5 | 2 |
| Contribution margin per pound of material | $10.20 |
$20.00 |
Assume that Cane’s customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits?
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