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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 $240 $360 $320 Variable expenses: Direct materials 24 32 120 176 Other variable expenses 108 Total variable expenses 144 208 180 Contribution margin 96 $180 $112 35% Contribution margin ratio 40% 50% The same raw material is used in all three products. Barlow Company has only 4,400 pounds ofraw 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 filing its backlog of orders. The material costs S8 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
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