1and 2 Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit ofeach product follow:Selling priceVariable expenses:Direct materialsOther variable expensesTotal variable expensesContribution marginContribution margin ratioA$ 18018126144$3620%ProductB$ 2407296168$ 7230%C$ 22030140170$ 5023%The same raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will not beable to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) toconcentrate on next week in filling its backlog of orders. The material costs $6 per pound.Required:1. Calculate the contribution margin per pound of the constraining resource for each product.2. Assuming that Barlow has unlimited demand for each of its three products, what is the maximum contribution margin the companycan earn when using the 5,400 pounds of raw material on hand?

Contribution margin per pound is based on Contribution margin per unit and Pounds of material…

price e expenses: t materials variable expenses ariable expenses ution margin ution margin ratio A $ 180 18 126 144 $36 208 Product B $ 240 72 96 168 $72 30% C $ 220 30 140 170 $ 50 23% raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will no tain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which produc te on next week in filling its backlog of orders. The material costs $6 per pound.

price e expenses: t materials variable expenses ariable expenses ution margin ution margin ratio A $ 180 18 126 144 $36 208 Product B $ 240 72 96 168 $72 30% C $ 220 30 140 170 $ 50 23% raw material is used in all three products. Barlow Company has only 5,400 pounds of raw material on hand and will no tain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which produc te on next week in filling its backlog of orders. The material costs $6 per pound.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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