question 7

Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4.9 pounds of the material, Ike uses 4 pounds of the material, and Bix uses 6 pounds of the material. Selling price per unit and variable costs per unit of each product follow.

300k

Selling price per unit

Variable costs per unit

Kin

Ike

Bix

$ 178.46 $ 123.80 $ 206.60

103.00

91.00

137.00

(a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in which management should produce and meet demand.