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Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit): Product A Selling Price $92 Variable Expenses Direct Materials

Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit):

Product A

Selling Price $92

Variable Expenses

Direct Materials $27.60

Other Variable Expeneses $27.60

Total Variable Expenses $55.20

Contribution Margin $36.80

Contribution Margin Ratio 40%

Product B

Selling Price $66.00

Variable Expenses

Direct Materials $18.00

Other Variable Expeneses $31.50

Total Variable Expenses $49.50

Contribution Margin $16.50

Contribution Margin Ratio 25%

Product C

Selling Price $82.00

Variable Expenses

Direct Materials $12.00

Other Variable Expeneses $45.40

Total Variable Expenses $57.40

Contribution Margin $24.60

Contribution Margin Ratio 30%

The company estimates that it can sell 950 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 6,100 pounds available each month.

Required:

1. Calculate the contribution margin per pound of the constraining resource for each product.

2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third?

3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 6,100 pounds of materials?

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