Exercise 11-12 Volume Trade-Off Decisions [LO11-5]
Benoit Company produces three productsA, B, and C. Data concerning the three products follow (per unit):
| | Product |
| | A | | B | | C |
| Selling price | $ | 92.00 | | | $ | 66.00 | | | $ | 82.00 | |
| Variable expenses: | | | | | | | | | | | |
| Direct materials | | 27.60 | | | | 18.00 | | | | 12.00 | |
| Other variable expenses | | 27.60 | | | | 31.50 | | | | 45.40 | |
| Total variable expenses | | 55.20 | | | | 49.50 | | | | 57.40 | |
| Contribution margin | $ | 36.80 | | | $ | 16.50 | | | $ | 24.60 | |
| Contribution margin ratio | | 40 | % | | | 25 | % | | | 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?
Chapter 11: Homework i Saved Help Save a Exercise 11-12 Volume Trade-Off Decisions (LO11-5) Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): points A $92.00 Product B $66.00 $82.00 eBook 27.60 27.60 18.00 31.50 12.00 45.40 Print Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 55.20 $36.80 49.50 $16.50 57.40 $24.60 References 40% 25% 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the contribution margin per pound of the constraining resource for each product. (Round your answers to 2 decimal places.) Product Product B Product C Contribution margin per pound of the constraining resource Required 1 Required 2 > Chapter 11: Homework A Saved Help Exercise 11-12 Volume Trade-Off Decisions (LO11-5] Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): points A $92.00 Product B $66.00 $82.00 eBook 27.60 27.60 18.00 31.50 12.00 45.40 Print Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 55.20 49.50 57.40 $36.80 $16.50 $24.60 References 40% 25% 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? Product A Product B Product C Exercise 11-12 Volume Trade-Off Decisions [LO11-5) Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): points A $92.00 Product B $66.00 $82.00 eBook 27.60 27.60 18.00 31.50 12.00 45.40 Print Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 55.20 49.50 57.40 $36.80 $16.50 $24.60 References 40% 25% 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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? (Round your intermediate calculations to 2 decimal places.) Maximum contribution margin
