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Chattahoochee River Company produces three products-26Z, 4D, and 19R. Data concerning the three products follow (per unit): Selling Price Variable Expenses Direct materials Other variable
Chattahoochee River Company produces three products-26Z, 4D, and 19R. Data concerning the three products follow (per unit): Selling Price Variable Expenses Direct materials Other variable expenses Contribution Margin Contribution Margin Ratio Product 26Z 4D 19R 250 214 241 110 75 67 46 57 66 94 82 108 37.6% 38.3% 44.8% The company estimates that it can sell 1,200 units of each product per month. The same raw material is used in each product. The material costs $5.50 per cubic foot with a maximum of 20,766 cu feet available each month. Required: 1. Calculate the contribution margin per cubic foot of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for 26Z, 4D, or 19R? 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 20.766 cubic feet of materials
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