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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 $320 $300 Variable expenses: Direct materials 18 72 27 198 Other variable expenses 122 120 140 225 Total variable expenses 192 60 $128 75 Contribution margin 30% 25% Contribution margin ratio 40% The same raw material is used in all three products. Barlow Company has only 4,100 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 $9 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 L Contribution margin per pound
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