Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Barlow Company manufactures three products-A. B, and C. The selling price, variable costs,and contribution m for one unit of each product follow: Product Selling

image text in transcribed
2. Barlow Company manufactures three products-A. B, and C. The selling price, variable costs,and contribution m for one unit of each product follow: Product Selling price Variable expenses: S 180 S 270 $240 Direct materials 24 80 32 Other variable expenses Total variable expenses 102 100 148 126 180 180 Contribution margin S54 S 90 S 60 Contribution margin ratio 30% 33.33% 25% The same raw material is used in all three products. Barlow Company has only 6,600 pounds of raw material on hand and will not be able 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) to concentrate on next week in filling its backlog of orders. The material costs $8 per pound supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow's estimated customer demand is 500 units per product line and that the company has used its pounds of raw material in an optimal fashion, what is the highest price Barlow Company should be willing to pay tor an additional pound of materials? A. $17 B. $18 C. $22 D. $20 E. None of the above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions