Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Assessment Tool iFrame Selling price Variable expenses: Direct materials A Product B $ 80.00 $ 62.00 C $ 81.00 24.00 18.00 9.00 Other variable expenses 24.00 25.40 43.65 Total variable expenses 48.00 43.40 52.65 Contribution margin $ 32.00 $ 18.60 $ 28.35 Contribution margin ratio 40% 30% 35% 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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? (Round your intermediate calculations to 2 decimal places.) Maximum contribution margin < Required 2 Required 3 >
Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Assessment Tool iFrame Selling price Variable expenses: Direct materials A Product B $ 80.00 $ 62.00 C $ 81.00 24.00 18.00 9.00 Other variable expenses 24.00 25.40 43.65 Total variable expenses 48.00 43.40 52.65 Contribution margin $ 32.00 $ 18.60 $ 28.35 Contribution margin ratio 40% 30% 35% 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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? (Round your intermediate calculations to 2 decimal places.) Maximum contribution margin < Required 2 Required 3 >
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 22E: Total cost method of product pricing Based on the data presented in Exercise 17, assume that Smart...
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Transcribed Image Text:Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit):
Assessment Tool iFrame
Selling price
Variable expenses:
Direct materials
A
Product
B
$ 80.00
$ 62.00
C
$ 81.00
24.00
18.00
9.00
Other variable expenses
24.00
25.40
43.65
Total variable expenses
48.00
43.40
52.65
Contribution margin
$ 32.00
$ 18.60
$ 28.35
Contribution margin ratio
40%
30%
35%
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?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 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? (Round your intermediate calculations to 2 decimal places.)
Maximum contribution margin
< Required 2
Required 3 >
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