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Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product Selling price $200 $250 $220 Variable expenses: 32 Direct materials Other variable 80 40 108 70 125 165 55 expenses Total variable expenses Contribution margin Contribution margin 140 150 s 60 $100 ratio 30% 40% 25% The same raw material is used in all three products. Barlow Company has only 5,300 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.
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