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Assume that a company makes three products-Product A. Product B, and Product C-and provides the following information with respect to those products: Selling price
Assume that a company makes three products-Product A. Product B, and Product C-and provides the following information with respect to those products: Selling price Variable costs per unit: Product A Product B Product C $ 70 $ 75 $ 85 Direct materials Direct labor Variable overhead Total variable cost per unit Contribution margin per unit 16 24 20 40 28 32 2 2 3 58 54 55 $ 12 $ 21 $ 30 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per pound. The company has only 3,000 pounds of direct materials available for production. Assuming the company has made optimal use of its 3,000 pounds of direct mate what is the maximum amount per pound the company should be willing to pay for additional direct materials? Multiple Choice $16.00 $20.00
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