Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: A $240 Product B $350 C $300 Selling price Variable expenses Direct materials Other variable expenses Total variable expenses Contribution margin 32 136 168 $ 72 30% 80 130 210 140 40% 40 185 225 575 Contribution margin ratio 25% The same raw material is used in all three products. Barlow Company has only 4,000 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. Required: 1. Compute the amount of contribution margin that will be obtained per pound of material used in each product. Contribution margin per unit Direct material cost per unit Direct material cost per pound Pounds of material required per unit Contribution margin per pound 2a. Compute the amount of contribution margin on each product. Contribution margin per pound Pounds of material available Total contribution margin 2b. Which orders would you recommend that the company work on next week--the orders for product A, product B, or product C? Product A Product B Product C 3. A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. If there is unfilled demand for all three products, what is the highest price that Barlow Company should be willing to pay for an additional pound of materials? Maximum amount per pound References eBook & Resources Worksheet Learning Objective: 07.05 Determine the most prontable use of a constrained resource Difficulty: 1 Easy Learning Objective: 07-06 Determine the value of obtaining more of the constrained resource. Check my work Type here to search A du dx 12:57 PM 8/17/2019 31